Heath and Logan Inc $$\begin{array} { l c c c } \text { Year: } & 1 & 2 & 3 \\\hline \text { Free cash flow: } & - \$ 15 & \$ 10 & \$ 40\end{array}$$

Multiple Choice

Heath and Logan Inc.forecasts the free cash flows (in millions) shown below.The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3.Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions? $$\begin{array} { l c c c } \text { Year: } & 1 & 2 & 3 \\\hline \text { Free cash flow: } & - \$ 15 & \$ 10 & \$ 40\end{array}$$

A) $315
B) $331
C) $348
D) $367
E) $386