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Jay Johnson is a managing partner of the venture capital company SmartFunds, which fully owns a video gaming start-up called Racoons. Racoons has no debt financing. The corporate tax rate for the video gaming industry is 0%. Business intelligence (BI) unit of SmartFunds reported that a potential acquirer, Ubisoft (a big player in the video gaming industry) was likely to estimate stand-alone cash flows of SmartFunds next year at $0.6 million, and its beta at 1.6 and long-term growth rate at 5.2% per year ever after. Moreover, the BI unit had learned that Ubisoft was likely to count on a sales increase of Racoons products through Ubisoft retail network in the magnitude of $0.9 million (net of additional costs).Also, the unit indicated that Ubisoft probably assumed that, due to acquisition of Racoons, it would get access to its programming libraries, which would lead to cost savings in game development of Ubisoft core games in a magnitude of $0.7 million next year.Ubisoft had a beta of 0.9 and a long-term growth rate of cash flows of 2.4%.Ubisoft was also reported to expect no change in growth rates or risk profiles of the respective business units after the acquisition.

Market risk premium was commonly believed to be 4.1% and the risk free rate 3.4%.

Which maximum offer price for Racoons can Jay expect from Ubisoft? Please, provide the answer in millions; do not use the dollar sign.

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Jay Johnson is a managing partner of the venture capital company SmartFunds, which fully owns a video gaming start-up called Racoons. Racoons has no debt financing. The corporate tax rate for the video gaming industry is 0%. Business analysts in Jay's team, who were following Racoons and were very familiar with the market as well as Racoons's intellectual property, had the following assessment of the stand-alone dynamics of the company: $0.8 million cash-flows in 2021 (exactly a year from now), 4.4% growth rate of cash flows thereafter in perpetuity and a beta of 1.2.

Market risk premium was commonly believed to be 4.1% and the risk free rate 3.4%.

If SmartFunds were offered to sell Racoons, what should be Jay's reservation value for Racoons? Please, provide the answer in millions; do not use the dollar sign.