American Cable Corporation (ACC) is planning to acquire AirThread Connections (ATC). ATC is primarily a wireless company with a sizeable minority investments in equity affiliates. Based on your calculations, the enterprise value of ATC based on a discounted free cash flow valuation is estimated to be $5.89 billion. As for the non-operating investments in equity affiliates, you use a market multiple method to estimate it to be $1.72 billion. What is the maximum amount that you would recommend that ACC should pay to acquire ATC? While no other bidders are interested, a less than fair price could trigger potential lawsuits against ACC. [2 points]

Circle one of the responses (in billions of dollars): 1.72 4.17 5.89 7.61

Explain why: