A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions? show your calculation.
Year: 1 2 3
Free cash flow: -$15 $10 $40
a. $315
b. $331
c. $348
d. $367
e. $386