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1. Suppose that a company has the following free cash fows projected for the next few years (right now it is t = 0): Year

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1. Suppose that a company has the following free cash fows projected for the next few years (right now it is t = 0): Year 1 2 3 4 Free cash Flows 200 300 400 500 The coinpany's cost of capital is 12%. (a) If the terminal value of the company in year 4 is $4,000, what is the enterprise (b) Suppose instead that you are told that the company projects free cash flows of value of the company? $500 in year 5, which grows at a rate of 1% forever thereafter. What is the terminal value of the.company as of year 4? What is its enterprise value? (c) Instead of the information in parts (a) and (b), you are only told that similar companies that have sold have had an enterprise value multiple, EV/EBITDA, of 20.00. The company's EBITDA in year 4 is $200. Using this multiple, estimate the company's terminal value in year 4. What is its enterprise value now

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