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Calculate PV of free cash flows in each year up to terminal value point in time. Example: Free Cash Flows for ABC, Inc. Assume t

Calculate PV of free cash flows in each year up to terminal value point in time.

Example:

Free Cash Flows for ABC, Inc.

Assume t0 = 2003 and k = 10%

2003: (500) 2008: 3,200

2004: 1,200 2009: 4,300

2005: 1,900 2010: 5,100

2006: 2,100 2011: 5,800

2007: 2,500 2012: 6,400

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