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Consider the table given below to answer the following question. Year 1 2 3 4 5 6 7 8 9 10 Asset value 8.00 9.20

Consider the table given below to answer the following question.

Year 1 2 3 4 5 6 7 8 9 10
Asset value 8.00
9.20
10.58
12.17
13.63
15.26
17.09
18.63
20.31
22.14
Earnings 1.20
1.38
1.59
1.83
2.04
2.21
2.39
2.52
2.23
2.44
Net investment 1.20
1.38
1.59
1.46
1.64
1.83
1.54
1.68
1.83
1.99
Free cash flow (FCF)





0.37
0.41
0.38
0.85
.84
0.41
0.44
Return on equity (ROE) 0.15
0.15
0.15
0.15
0.15
0.145
0.14
0.135
0.11
0.11
Asset growth rate 0.15
0.15
0.15
0.12
0.12
0.12
0.09
0.09
0.09
0.09
Earnings growth rate 0.15
0.15
0.15
0.12
0.08
0.08
0.05
0.11
?0.09
1.12

Assuming that competition drives down profitability (on existing assets as well as a new investment) to 14.5% in year 6, 14% in year 7, 13.5% in year 8, and 11% in year 9 and all later years. What is the value of the concatenator business?

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