Question 37 - Fin_q18-5 - 47805.1.0 Toys For Toddlers Ltd (TFT) is considering the acquisition of another firm for $600 million. The acquisition is expected to Increase TFT's free cash flow by $80 million in the first year, and this contribution is expected to grow at a rate of 9% every year thereafter. TFT currently maintains a debt-to-equity ratio of 0.5, its marginal tax rate is 40%, its cost of debt ro is 5%, and its cost of equity Te is 8%. TFT will maintain a constant debt-to-equity ratio for the acquisition The Free Cash Flow-to-Equity (FCFE) for the acquisition in year 1 is closest to: A $92 million B $98 million $10 million D $174 million