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:(Click on the following icon

in order to copy its contents into a spreadsheet.)

Year 1

Year 2

Year 3

Year 4

Free Cash Flow

$117,000

$11,000

$98,000

$152,000

Assume cash flows after year 4 will grow at

3%

per year, forever. If the cost of capital for this division is

18%,

what is the continuation value in year 4 for cash flows after year 4? What is the value today of this division?

Question content area bottom

Part 1

What is the continuation value in year 4 for cash flows after year 4?

The continuation value is

$enter your response here.

(Round to the nearest dollar.)