Assume that the target firm will generate $10 million FCFs next year (with growth rate=5%) and that the cost of capital for this firm is 15%. Assume that as an acquiring firm, you are in a much safer business and have a cost of equity of 10%. Both the target and acquirer are public companies. What is the value of the target?

Select one:

a. $105 million

b. $100 million

c. $205 million

d. $200 million

e. $210 million