Apple Inc. Balance SheetAs of September 30 ($ billions)ASSETSYear 3Cash$40.50Accounts Receivable13.10Inventories1.80Other17.90Total Current Assets73.30Long-term Marektable Assets106.20Property, Plant & Equipment, Net16.60Goodwill10.90Total Assets$207.00LIABILITIES & OWNERS' EQUITYAccounts payable$22.40Other21.30Total Current Liabilities43.70Long-term Debt17.00Other Liabilities22.80Total Liabilities83.50Common Stock19.80Retained Earnings103.80Total Owners' Equity123.50Total Liabilities & Owners' Equity$207.00

Your junior analyst has prepared a cash flow forecast for Apple Inc. She forecasts free cash flow in year 4 of $40 billion. After year 4, the free cash flow will grow at a constant rate of 2.5% in perpetuity. What is the value of Apple's equity at the beginning of year 4? The company's cost of capital is 9%. Additional information is provided in the balance sheet.

1. $598B
2. $615B
3. $745B
4. $762B