Final answer:
Without specific data or a forecast for year 3, it is impossible to determine the free cash flow for Online Architects in that period based on the information provided.
Step-by-step explanation:
The question asks for the free cash flow for year 3 of a business called Online Architects, but the data provided doesn’t include the specific free cash flow values beyond year 2. The cash flows presented are for the current time, which is $15 million, for one year from now, which is $20 million, and for two years from now, which is $25 million. Without additional information for year 3, it is not possible to determine the free cash flow for that period. If a forecast or projection was given for the years in question, the free cash flow for year 3 could be answered among the options presented. However, given the current data provided, none of the answer choices ($20 million, $25 million, $30 million, $35 million) can be confirmed as the free cash flow for year 3.
The free cash flow for year 3 can be found by using the formula for future value of cash flows. In this case, we have the following cash flows:$15 million in present$20 million in one year$25 million in two years$30 million in three yearsUsing an interest rate of 9% as the cost of financial capital, we can calculate the future value of each cash flow and then find the value of the cash flow in year 3. By doing the calculations, we determine that the free cash flow for year 3 is $102 million.