You have been asked to estimate the value of a Canberra inc, a mature Australian Steel company for acquisition by a US steel company. The expected cash flows for next year have been estimated below and they are expected to grow 3% a year in perpetuity, in millions of Australian dollars:

	Most recent year	Next year
Net income	$ 100.00	$ 103.00
- (Cap Ex - Depreciation)	$ 40.00	$ 41.20
- Chg in non-cash WC	$ 20.00	$ 20.60
+ New Debt issued	$ 15.00	$ 15.45
Free Cash Flow to Equity	$ 55.00	$ 56.65

The US company has a US dollar cost of equity of 9% and a US $ cost of capital of 8%. Australia can be viewed as a mature market. If the inflation rate is 4% in Australia and 2% in US, what value would you attach to these cash flows?

(Hint Currency & cash flow consistency)

a. $1,452 b. $944 c. $696 d. $1,940 e. $794