Shiller Corporation is undergoing a restructuring, and its free cash flows (FCF) are expected to vary considerably during the next few years. However, the FCF is expected to be $25.00 million in Year 5, and the FCF growth rate is expected to be a constant 6.5% beyond that point. The weighted average cost of capital is 12.0%. What is the horizon (or terminal) value (in millions) at t = 5?

• A. $454
• B. $484
• C. $514
• D. $564
• E. $614

A company's stock is expected to pay a dividend of $0.75 at the end of the year. The stock's required rate of return is 10.5%, and the expected constant growth rate for future dividends is 6.4%. What is the stock's current value if the company's tax rate is 25%?

• A. $15.84
• B. $18.29
• C. $13.72
• D. $21.22
• E. $19.75

Morningstar's basis for determining the value of Earthlink, Inc. common stock was predicated on:

• A. projected increases in the firm's revenue
• B. projected advances in the firm's technology
• C. optimism about growth in the firm's subscriber base
• D. projected positive future cash flows
• E. two of the above
• F. all of the above