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(15) 2. You are considering the acquisition of Firm A. Proforma financial information for Firm A is below; the appropriate discount rate for Firm A

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(15) 2. You are considering the acquisition of Firm A. Proforma financial information for Firm A is below; the appropriate discount rate for Firm A is 15%. After year 20, you will assume that the cash flow from year 20 will then grow at 2% forever. The tax rate is 25%. You will take on Firm A's debt. Firm A Years 1-6 Year 7 Years 8-14 Year 15 Years 16-20 Sales 2,100 2,700 2,700 2,700 3,000 Depreciation 200 200 210 210 300 EBIT is assumed to be 60% of Sales. 300 300 300 100 200 Interest Capital Expenditures 0 800 0 1000 0 Increases in Working Capital is of the change in sales; invested the period before the Principal Payment 0 0 0 500 0 Calculate the discounted cash flow value for Firm A

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