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ABC Software is considering starting a new division making phone apps. It has prepared the following five-year forecast of free cash flows for this division.

12345Free Cash Flows69,00020,00024,00083,000215,000

Assume that the cash flows after year 5 will grow at 1% per year, forever. The discount rate for this division is 8%.

What is the terminal value as of year 5 (i.e., the value of all future cash flows starting in year 6)?

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