Illinois Institute of Technology Problem CON 423 A few ago Due: February 2, 2017 cash its a subsidiary of IBM offered to purchase another company for $200 billion in order to flows business. way to value an entire company is to find the present value of the annual generated by the company. a How large would the acquired company's annual cash flows (after-tax) have to be in order to justify IBM's purchase price if they were discounted at 18% and continued indefinitely with no growth? b. Assume that the first annual cash flow (one year after acquisition) was expected to be $24 billion, but it would then grow at a constant annual growth rate (indefinitely). If IBM's required rate of return (discount rate) was still 18%, how large would the growth rate have to be in order to justify the purchase price? 8. William Chris opened a steak house a few years ago with his sister, Ruth. In going through their financial records they found an old amortization schedule that their lender had prepared when they took out a loan to start the business. Unfortunately, the amortization schedule had A-1 Sauce, Worcestershire Sauce, and other condiments spilled all over it. The only thing that William and Ruth could make out that the the payments were at an APR of the balance after ten years was $281,189.40 being too financially astute (nor having either good memories or good records. they ask you to determine how much interest they would pay in the eleventh year