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Question
Given the following data, what is the enterprise value of the company?
| Free cash flow (FCF) for year 1 | $50m |
| FCF for year 2 | $50m |
| Continuing value of FCF at t = 2 | $291.6m |
| Interest tax shield (ITS) for year 1 | $5m |
| ITS for year 2 | $5m |
| Continuing value of ITS at t = 2 | $17.5m |
| Unlevered cost of equity | 8% |
| WACC | 7% |
| Midyear adjustment factor | $4m |
| Excess cash and investments | $18m |
a) $301m
b) $285m
c) $349m
d) $100m
Answer
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