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2. Since growth is stable for ApparelCo, you decide to start the continuing value with year 3 cash flows (i.e., cash flows in year 3

2. Since growth is stable for ApparelCo, you decide to start the continuing

value with year 3 cash flows (i.e., cash flows in year 3 and beyond are

part of the continuing value). Using the key value driver formula (and data

provided in Question 1), what is the continuing value as of year 2? Using

discounted cash flow, what is the value of operations for ApparelCo? What

percentage of ApparelCos total value is attributable to the continuing value?

How do these percentages compare to Question 1?

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