Free Cash Flow Valuation of ABC Corp

ABC Corp is a mature company operating in the consumer goods sector. Analysts have projected the company will generate free cash flows (FCF) of $200 million, $220 million, and $240 million for the next three years, respectively. After the third year, they expect the free cash flows to grow at a stable rate of 4% indefinitely.

The company has a weighted average cost of capital (WACC) of 10%. Calculate the present value of ABC Corp’s enterprise value based on the free cash flow valuation approach. To complete the valuation, determine the present value of the free cash flows for the first three years, and the present value of the terminal value.

Assume that all calculations should consider the provided discount rate and growth assumptions.