The potential takeover target is expected to have annual cash flows of $200,000 next year. The cash flow will grow at 5% a year. The appropriate beta is 2. The expected return on the market is 10% and the risk-free rate is 2%. Estimate the target firms value.

Group of answer choices

$1,538,462

$1,176,471

$4,000,000

$1,111,111