Bay Properties is considering starting a commercial real estate division. It has prepared the following two-year forecast of free cash flows for this division:

($million) Year 1 Year 2

Free Cash Flow -100 12

Assume cash flows after year 2 will grow at 4% per year, forever. If the cost of capital for this division is 14%,

What is the continuation value in year 2 for cash flows after year 2? (2 points)

What is the value today of this division? (2 points)