XYZ Corporation is undergoing a restructuring, and its free cash flows are expected to be unstable during the next few years. However, FCF is expected to be $30 million in year 5, i.e., FCF at t= 5 equals $30 million, and FCF growth rate is expected to be constant at 5% beyond that point. The initial investment is $280 Millions.

Year FCF Millons

1 60

2 30

3 40

4 40

5 and hereafter 30

1) what is the weighted average capital cost of 11%, what is the horizon value (in millions) at t=5?

2) What is the operation value of XYZ Corporation?