Your employer, a midsized human resources management company, is considering

expansion into related fields, including the acquisition of Temp Force Company, an employment

agency that supplies word processor operators and computer programmers to

businesses with temporarily heavy workloads. Your employer is also considering the purchase

of Biggerstaff & McDonald $($B&M$),$ a privately held company owned by two friends,

each with $5$ million shares of stock. B&M currently has free cash flow of $$24$ million, which

is expected to grow at a constant rate of $5\%.$ B&M$$s financial statements report short$-$term

investments of $$100$ million, debt of $$200$ million, and preferred stock of $$50$ million.

B&M$$s weighted average cost of capital $($WACC$)$ is $11\%.$ Answer the following questions:

d$.$ Suppose the free cash flow at Time $1$ is expected to grow at a constant rate of gL

forever.

$(1)$ If gL $<$ WACC, what is a formula for the present value of expected free cash flows

when discounted at the WACC?

$(2)$ If the most recent free cash flow is expected to grow at a constant rate of gL forever

$($and gL $<$ WACC$),$ what is a formula for the present value of expected free

cash flows when discounted at the WACC?