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 the FCF growth rate is

expected to be constant at 5% beyond that point. The initial investment is 280 millions.

Year FCF (Millions)

1. 60
2. 30
3. 40
4. 40

1) With WACC of 11%. What is the horizon value (in millions) at t = 5?

2) What is the operation value of XYZ corporation?