a) A firm forecasts free cash flow of RM40 million in five years. It expects the free cash flow to grow at a constant rate of 6 percent thereafter. If the weighted average cost of capital is 9 percent, what is the horizon value, to the nearest million?

b) A company forecasts free cash flow in year one will be RM1 million and free cash flow in year 2 will be RM4 million. After the second year, free cash flow will grow at a constant rate of 5 percent per year forever. If the overall cost of capital is 10 percent, what is the current value of operations, to the nearest million?

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