Answer:
d. $2,000,000
Explanation:
The computation of the value of its operation is shown below:
= Projected cash flow for the next year ÷ (Weighted average cost of capital - Growth Rate)
= $100,000 ÷ (11% - 6%)
= $100,000 ÷ 5%
= $2,000,000
We simply take the next year projected cash flow and divide it by taking the difference between the weighted average cost of capital and the growth rate
