The following table shows the projected free cash flows of an acquisition target. The potential...
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Finance
The following table shows the projected free cash flows of an acquisition target. The potential acquirer wants to estimate its maximum acquisition price at an 8 percent discount rate and a terminal value in year 5 based on the perpetual growth equation with a 4 percent perpetual growth rate.
Year
1
2
3
4
5
Free cash flow
880
440
0
248
796
Estimate the targets maximum acquisition price.
Note: Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.
Estimate the targets maximum acquisition price when the discount rate is 7 percent and the perpetual growth rate is 5 percent.
Note: Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.
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