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# A company forecasts free cash flow next year to be $4 million, $8 million in two years, and $12 million in 3 years.

A company forecasts free cash flow next year to be $4 million, $8 million in two years, and $12 million in 3 years. Thereafter, free cash flow is projected to grow at a constant rate of 3% per year forever. If the overall cost of capital is 15%, what is the current value of operations, to the nearest million?

YearCash FlowsDiscount factor @ 15%Present Value 12348120.869565 0.756144 0.657516$ 3.48 $ 6.05 $ 7.89 Total $ 17.42 Present value of cash flow after year 3= $ 67.72 Thus, Total Present...