$24$

$1$ point

A large company is looking to acquire a smaller business. The company believes that, under their management, free cash flows for upcoming years should be forecasted as shown below, and would continue to grow $3\mathrm{.}2\%$ per year after that indefinitely. The company will apply a $10\mathrm{.}82\%$ cost of capital $($i$.$e$.,$ the required rate of return is $10\mathrm{.}82\%).$ What is the maximum amount the company should offer as a bid for buying this business?

$\backslash$table$[[$Year $0,$Year $1,$Year $2,$Year $3,$Year $4,$Year $5],[$Initial Investment,$$503,000,$$$528,000,$$$559,000,$$$565,000,$$$593,000$