Talcon Corporation has a 11% unlevered cost of equity. The company forecasts the free cash flows shown below. The cash flows are expected to grow at a constant rate of 4% rate after Year 3.

a. Calculate the expected free cash flow for Year 4. What might cause the free cash flow to be lower?

b. Calculate the horizon value of the unlevered operations.

c. Calculate the total value of unlevered operations at Year 0.

Unlevered cost of equity	11%
Growth rate after Year 3	4%	Year 1	Year 2	Year 3
Free Cash Flow		450	750	805