Brooks Enterprises has never paid a dividend.

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Brooks Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next w years, respectively, and after the second year it is expected to grow at a constant rate of 8 percent. The company's weighted average cost of capital is WACC = 12%.

a. What is the terminal, or horizon, value of operations? (Find the value of all free cash flows beyond Year2 discounted back to Year 2).

b. Calculate the value of Brooks' operations.

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The horizon value = the value of all free cash flows beyond Year2 discounted back to Year 2= Free cash flow in ...

$2.19