b. You have just learned that B&M has undertaken a major expansion that will change its expected free cash flows to $10 million in 1 year, $20 million in 2 years, and $35 million in 3 years. After 3 years, free cash flow will grow at a rate of 5%. No new debt or preferred stock were added, the investment was financed by equity from the owners. Assume the WACC is unchanged at 11% and that there is still 10 million shares of stock outstanding. (1.) What is its horizon value (i.e., its value of operations at year three)? (a) What is the PV of explicitly forecased FCFs? (b) the PV of the horizon value?, and (c) its current value of operations

Explicit forecast:
Year	0	1	2	3
FCF		FCF1	FCF2	FCF3
Constant growth from Year 3 and afterwards:
Year	0	1	2	3	4	5	t
FCF		FCF1	FCF2	FCF3	FCF3(1+gL)	FCF4(1+gL)	FCFt(1+gL)