TERMINAL VALUE ANALYSIS. TERMINAL VALUE REFERS TO THE VALUATION ATTACHED TO THE END OF THE PLANNING PERIOD AND THAT CAPTURES THE VALUE OF ALL SUBSEQUENT CASH FLOWS. ESTIMATE THE VALUE TODAY FOR EACH OF THE FOLLOWING SETS OF FUTURE CASH FLOW FORECASTS :

A. CLAYMORE MINING COMPANY ANTICIPATES THAT IT WILL EARN FIRM FREE CASH FLOWS (FCFs) OF $4 MILLION PER YEAR FOR EACH OF THE NEXT FIVE YEARS. MOREOVER, BEGINING IN YEAR 6, THE FIRM WILL EARN FCF OF $5 MILLION PER YEAR FOR THE INDEFINITE FUTURE. IF CLAYMORE S COST OF CAPITAL IS 10%, WHAT IS THE VALUE OF THE FIRM'S FUTURE CASH FLOWS ?