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Bay Properties is considering starting a commercial real estate division. It has prepared the following four-year forecast of free cash flows for this division: Assume
Bay Properties is considering starting a commercial real estate division. It has prepared the following four-year forecast of free cash flows for this division:
Assume cash flows after year 4 will grow at 4% per year, forever. If the cost of capital for this division is 12%, what is the continuation value in year 4 for cash flows after year 4?
In $ millions | Y1 | Y2 | Y3 | Y4 |
FCF | 200 | 250 | 175 | 170 |
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