The Granite Paving Company is all-equity financed and has the following free cash flows in years 1?4: $3 million ($3M); $3.7M; $4M; $4.2M. After year 4, the firm is expected to grow at a sustainable rate of 3 percent per annum. With a WACC of 12 percent, what is the horizon value in year 4 of Granite Paving Co?
A. $48.1M
B. $46.7M
C. $4.2M
D. $4.3M
Answer: A
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Fill in the blank(s) with the appropriate word(s).