Q2.  ABC’s the most recent free cash flow (FCF0) is $200 mil…

Q2.  ABC’s the most recent free cash flow (FCF0) is $200 million.  The free cash flow is expected to grow at a rate of 40 percent in next year and 10 percent in the second year. After two years, it is expected to grow forever at a constant rate of 6 percent.  The cost of common stock (rs) is 10% and the weighted average cost of capital (WACC) is 8%. What cost of capital you use to calculate the value of operation (Vop)?

Q3.  ABC’s the most recent free cash flow (FCF0) is $200 mil…

Q3.  ABC’s the most recent free cash flow (FCF0) is $200 million.  The free cash flow is expected to grow at a rate of 40 percent in next year and 10 percent in the second year. After two years, it is expected to grow forever at a constant rate of 6 percent.  The cost of common stock (rs) is 10% and the weighted average cost of capital (WACC) is 8%. Calculate value of operation (Vop).