Determination of horizon value

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Reference no: EM1377273

Akyol Company is undergoing a restructuring, and its free cash flows are expected to be unstable during next some years. However, FCF is expected to be $50 million in Year five, i.e., FCF at t = 5 equals $50 million, and the FCF growth rate is expected to be constant at 6% beyond that point. If the weighted average cost of capital is 12 percent, what is the horizon value (in millions) at t = 5?

A. $719
B. $757
C. $797
D. $839
E. $883

Reference no: EM1377273

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