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Alpha Investments LLC is an investment firm specializing in buying out companies. The required rate of return for ABC Co is 7%. What is the
Alpha Investments LLC is an investment firm specializing in buying out companies. The required rate of return for ABC Co is 7%. What is the intrinsic value of the company for Alpha Investments using the following estimates:
\begin{tabular}{|l|c|c|c|c|} \hline \multicolumn{1}{|c|}{ Estimate } & Cashflow(fornextyear) & Shorttermgrowthrate(next3years) & Cashflow(foryear4) & Longtermgrowthrate(after3years) \\ \hline Dividends(pershare) & $0.00 & 0% & $0.20 & 3% \\ \hline Freecashflowtoequity(pershare) & $0.40 & 2% & ??? & 0% \\ \hline \end{tabular}Step by Step Solution
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