Question
Firm C is considering the acquisition of Firm T. Firm C has estimated the cash flows, cost of capital, and growth rate for Firm T
Firm C is considering the acquisition of Firm T. Firm C has estimated the cash flows, cost of capital, and growth rate for Firm T shown below. Using these estimates, estimate the current value of Firm T using the terminal value (aka horizon value) technique.
| Year 1 | Year 2 | Year 3 | Year 4 | |
| CF | $2,130 | $2,420 | $2,890 | $3,210 |
WACC = 12%, g = 3% (assumed constant following year 4).
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Investment Science
Authors: David G. Luenberger
1st Edition
0195108094, 978-0195108095
