Tutter Corporation Is Being Valued Using Discounted Cash Flow Methodology

Multiple Choice

Tutter Corporation is being valued using discounted cash flow methodology with terminal value calculated as a growing perpetuity.Not including the terminal value,the present value of projected free cash flows for years 1 through 5 is $200 million (total) .In year 5,projections show free cash flow of $60 million.What is the estimated fair market value of Tutter Corporation? Assume a WACC of 10% and a growth rate of 2%.

A) $666 million
B) $675 million
C) $950 million
D) $965 million