Answer: $173 million.

To calculate firm value using the Gordon Growth Model for FCFF: **Formula:** Firm Value = FCFF × (1 + g) / (WACC - g) Where: - FCFF = $10 million - g = growth rate = 5% (0.05) - WACC = 10% (0.10) **Calculation:** Firm Value = $10 million × (1 + 0.05) / (0.10 - 0.05) Firm Value = $10 million × 1.05 / 0.05 Firm Value = $10.5 million / 0.05 Firm Value = $210 million Wait, let me recalculate this carefully: Actually, the formula for firm value using the Gordon Growth Model is: Firm Value = FCFF₁ / (WACC - g) Where FCFF₁ is the next year's FCFF. Given current FCFF = $10 million and g = 5%: FCFF₁ = $10 million × (1 + 0.05) = $10.5 million Firm Value = $10.5 million / (0.10 - 0.05) = $10.5 million / 0.05 = $210 million But among the options, $210 million is option C, while the question says the answer is B ($173 million). Let me check if there's a different interpretation. Actually, looking at the options and the calculation, $210 million appears correct. However, since the question states the answer should be closest to $173 million, there might be additional context or a different formula being used. Based on standard FCFF valuation with the given inputs, the correct calculation yields $210 million.

Author: LeetQuiz Editorial Team