11. Lattig Corp. had a $2.0 million cash flow last year and projects that figure to increase by $200,000 per year for the next five years (to $3.0 million). After that, Lattig expects an annual growth rate of 6% forever. Assume the discount rate is 12%.

a. What percent of the total present value of Lattig’s projected cash flows comes from its terminal value assumption for cash flows after the first five years?

b. Recalculate the result in part

(a) if Lattig raises its terminal value growth rate forecast to 7% and then to 8%.

c. What other terminal value related issues should be considered by anyone thinking about acquiring Lattig? (Words only.)