It is the end of 2013, and KOC Inc. has just received a buyout offer from a private equity firm. Upon receiving the offer, KOCs board set up a special committee to evaluate the offer and to make recommendations about the transaction.

The special committee would like you to estimate the value of KOC based on management forecasts given below. Due to the nature of the transaction, you realize that the Capital Cash Flow (CCF) valuation is the most appropriate method. The valuations are to be done as of the end of 2013. KOC is subject to 37.5% tax rate.

KOC is currently debt free, but the transaction will be financed with term loans of $8.9 billion at an interest rate of 7% and bank debt of $12 billion at an interest rate of 8%. The firm pays interest during the year on its beginning-of-the-year debt balances. The outstanding debt amounts over the next five years are given below. Beyond 2018, you expect that KOCs outstanding debt will grow with firm value.

Outstanding Debt:

	Outstanding debt amounts at the end of
	2013	2014	2015	2016	2017	2018
Term Loan	8,900	7,900	6,900	5,900	4,900	3,900
Bank Debt	12,000	10,894	8,892	6,517	3,523	29

Management Projections of EBIT, Depreciation, and Capital Expenditures:

		Projected Fiscal Year Ending December 31st
			2014	2015	2016	2017	2018
EBIT			5,360	6,537	6,927	7,628	8,123
Depreciation			1,446	1,536	1,632	1,734	1,842
Capital Expenditure			1,560	1,634	1,784	1,904	2,015

Management Projections of Net Working Capital:

	2013 (Actual)	2014	2015	2016	2017	2018
Net Working Capital	348	489	584	640	659	679

Market and Interest Rate Data:

Risk-free rate = 4%

Market risk premium = 6%

Long-term growth rate = 3%

Interest rate on term loan = 7%

Interest rate on bank debt = 8%

Tax rate = 37.5%

Information about Comparable Companies:

Company		Equity Beta	Debt Beta	Total Debt ($m)	Market value of equity ($m)
RTH Healthcare		1.7	0.2	5,000	3,000
Health Management Associates		0.8	0.1	2,000	6,000
Community Health Systems		0.9	0.1	3,000	5,000

The enterprise value of KOC is closest to:

	$105,965 million
	$90,158 million

	$60,958 million
	$88,267 million

None of the values listed here