John Smith would like to value XYC Company. using the discounted cash flow (DCF) method. He forecasts Free Cash Flows (FCFs) of $135 million, $145 million, $146 million, respectively for years 1, 2, and 3. After year 3, he assumes FCFs will increase by 2 percent to perpetuity. John gathers the information below (his "input variables") to compute XYZ's cost of equity, debt, and enterprise value.

Cost of Equity Risk-Free-Rate = 3 percent

Beta = 1.03

Return of Market Portfolio (S&P 500) = 7 percent

Debt Financing Debt to Equity Ratio = 45 percent

Market Value of Zero-Coupon Bonds = $100 million or 75 percent of par value

Maturity of Zero-Coupon Bonds = 15 years Tax Rate = 35%

What is Automaton's Enterprise Value? Assume a WACC of 8.9% and constant growth rate of 2 percent to perpetuity and Nick's FCF forecasts.

A. $2030

B.$2584

C.$359

D.$1998