Assume Petros Plc trailing twelve month (ttm) free cash flow (FCF), equals to that period's operating cash flow minus capital expenditures and is determined as K70 Million. Suppose that you estimate that Petros cash flow will grow by 20% in the first two years, then 15% in the following three. After a few years, you may apply a long-term cash flow growth rate, representing an assumption of annual growth from that point on. This value should probably not exceed the long-term growth prospects of the overall economy; we will say that in this case, Company Petros Plc is 5%. Your calculated Weighted Average Cost of Capital (WACC) comes out to be 5%.

Required:

Calculate the terminal value, or long-term valuation of the company's growth using the Gordon Growth Model. 5 Marks