Valuation of XYZ Corporation Using FCF Model

XYZ Corporation is considering adopting a Free Cash Flow (FCF) model to value its equity. The company's projected free cash flows for the next five years are as follows: Year 1: $1 million, Year 2: $1.2 million, Year 3: $1.5 million, Year 4: $1.8 million, Year 5: $2 million. After Year 5, the company expects a terminal growth rate of 3%. Assuming a discount rate of 10%, which of the following statements accurately represents XYZ Corporation's approach to valuing its equity using free cash flow models?