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Problem #5: You forecast that year 1 unlevered cash flows for a firm are expected to be $101.2 million. You expect those cash flows to

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Problem \#5: You forecast that year 1 unlevered cash flows for a firm are expected to be $101.2 million. You expect those cash flows to grow at some high growth rate gh for 10 years (so the cash flows for years 2 through 10 are each (1+gh) times as large as the prior year. Starting in year 11 , you expect growth to slow to a permanent annual growth rate of 3%. Thus, the year 11 cash flow will be 3% larger than year 10 , the year 12 cash flow will be 3% larger than year 11 , and so on. The firm uses no debt and its cost of capital is 8.5%. If the current enterprise value of the firm is $2.75 billion, what is gh?

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