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Sallie's Sandwiches Sallie's Sandwiches is financed using 20% debt at a cost of 8%. Sallie projects combined free cash flows and interest tax savings of

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Sallie's Sandwiches Sallie's Sandwiches is financed using 20% debt at a cost of 8%. Sallie projects combined free cash flows and interest tax savings of $2 million in Year 1, $4 million in Year 2, $5 million in Year 3, and $117 million in Year 4. (The Year 4 value includes the combined horizon values of FCF and tax shields.) All cash flows are expected to grow at a g% constant rate after Year 4. Sallie's beta is 2.0, and its tax rate is 25%. The risk-free rate is 6%, and the market risk premium is 5%. Using the data for Sallie's Sandwiches and the compressed adjusted present value model, what is the total value (in millions)? a. $72.37 b. $73.99 c. $75.81 d. 576.45 O e. $74.49

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