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You are valuing a levered firm. You make explicit forecasts of free cash flow for 6 years. The FCF in Year 6 is $8 million.
You are valuing a levered firm. You make explicit forecasts of free cash flow for 6 years. The FCF in Year 6 is $8 million. The unlevered return on the firm (ru) is 12%, and the WACC is 10%. You assess a growth rate in Year 7 and beyond as 2%. Find the continuation value of the cash flows from Year 7 onward, measured in terms of millions of Year 6 dollars.
Between $101 and $103 m
Between $79 and $81 m
Between $81 and $83 m
Between 95 and $97 m
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