Question
34. Enterprise Enterprises, a specialty pharmaceutical manufacturer, has been losing market share for three years since several key patents have expired. The free cash flow
34. Enterprise Enterprises, a specialty pharmaceutical manufacturer, has been losing market share for three years since several key patents have expired. The free cash flow to the firm in 2012 was $11 million. This figure is expected to decline rapidly as more competitive generic drugs enter the market. Projected cash flows for the next five years are $9.5 million, $8.0 million, $4 million, $2.5 million, and $0.7 million. Cash flow after the fifth year is expected to be negligible. The firm's board has decided to sell the firm to a larger pharmaceutical company interested in using Enterprise's product offering to fill gaps in its own product offering until it can develop similar drugs. Carlisle's cost of capital is 17%. What purchase price must Carlisle obtain to earn its cost of capital? Answer in millions to 2 decimal places, so if your answer is 123,456,789, answer 123.46. Show your work if you can, for partial credit.
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