The following table shows projected free cash flows for the next three years for Care4UMed Corp., a company producing portable oxygen machines. Year 1 2 3 After the three year period, Care4UMed is expected to grow at a constant rate of 7% and its WACC is 13%. Care4UMed has $35 million of debt and $120 million shares of stock outstanding. According to the video, what is the formula for Care4U Med's horizon value? O HV3 = OHV3 = Free Cash Flow (Millions of dollars) 16.00 17.12 18.32 FCFA WACC-8 O HVA FCFS X (1+g) O HV3 = O Vo = Care4UMed's horizon value is O Vo = FCFA 1+WACC Vo = According to the video, what is the formula for the firm's value today? FCF FCF₁ (1+WACC)¹ FCF₂ (1+WACC)2 (1+WACC)³ O Vo = FCF (WACC-g)³ FCF1 (1+WACC) HV3 (1+WACC) FCF₁ (1+WACC)¹ + + + Care4UMed's value today is million. FCF₂ FCF (1+WACC)2 (1+WACC)³ FCF₂ (1+WACC)² + FCF (1+WACC)³ million. + HV3 + + HV₁ (1+WACC) HV₂ (1+WACC)³

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