Gupta Corporation Is Undergoing a Restructuring, and Its Free Cash

Multiple Choice

Gupta Corporation is undergoing a restructuring, and its free cash flows are expected to vary considerably during the next few years. However, the FCF is expected to be $65.00 million in Year 5, and the FCF growth rate is expected to be a constant 6.5% beyond that point. The weighted average cost of capital is 12.0%. What is the horizon (or terminal) value (in millions) at t = 5?

A) $1,025
B) $1,079
C) $1,136
D) $1,196
E) $1,259