8. Please answer a & b completely
Carambola de Honduras. Slinger Wayne, a U.S. based private equity firm, is trying to determine what it should pay for a tool manufacturing firm in Honduras named Carambol Slingor Wayne estimates that Carambola will generate a free cash flow of 14 million Honduran lempiras (Lp) next year, and that this free cash fiow will continue to grow at a constant rate of 7.5% per anmum indefinitely A private equity firm like Slinger Wayne, however, is not interested in owning a company for long, and plans to sall Carambola at the end of three years for approximately 10 fimes Carambola's free cash flow in that year, The current spot exchange rate is Lp15 3447/5, but the Honduran inflation rate is expected to remain at a relatively high rate of 18.0% per annum compared to the U.S. dolar inflation rate of only 5.0% per annum Singer Wayne expects to eam at least a 24% annual rate of return on international. investments like Carambola a. What is Carambola worth if the Honduran tempira were to remain fixed over the three-year investment period? b. What is Carambola worth if the Honduran lempira were to chanee in value over fime accordina to purchasina power paritv? Calculate the free cash flows in Honduran lempiras (Lp) below. (Round to the nearest whole number.) Carambola de Honduras. Slinger Wayne, a U.S. based private equity firm, is trying to determine what it should pay for a tool manufacturing firm in Honduras named Carambol Slingor Wayne estimates that Carambola will generate a free cash flow of 14 million Honduran lempiras (Lp) next year, and that this free cash fiow will continue to grow at a constant rate of 7.5% per anmum indefinitely A private equity firm like Slinger Wayne, however, is not interested in owning a company for long, and plans to sall Carambola at the end of three years for approximately 10 fimes Carambola's free cash flow in that year, The current spot exchange rate is Lp15 3447/5, but the Honduran inflation rate is expected to remain at a relatively high rate of 18.0% per annum compared to the U.S. dolar inflation rate of only 5.0% per annum Singer Wayne expects to eam at least a 24% annual rate of return on international. investments like Carambola a. What is Carambola worth if the Honduran tempira were to remain fixed over the three-year investment period? b. What is Carambola worth if the Honduran lempira were to chanee in value over fime accordina to purchasina power paritv? Calculate the free cash flows in Honduran lempiras (Lp) below. (Round to the nearest whole number.)
