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need help with a and b please. not sure how to calculate it. Save Homework: Ch 18 HW Score: 0 of 25 pts 1 of

need help with a and b please. not sure how to calculate it. image text in transcribed
Save Homework: Ch 18 HW Score: 0 of 25 pts 1 of 4 (1 complete) HW Score: 16.67%, 16.67 of 100 pts Problem 18-1 (algorithmic) Question Help Carambola de Honduras. Slinger Wayne, a U.S.-based private equity firm, is trying to determine what it should pay for a tool manufacturing firm in Honduras named Carambola, Singer Wayne estimates that Carambola will generate a free cash flow of 13 milion Honduran Lempiras (LP) next year, and that this free cash flow will continue to grow at a constant rate of 7.0% per annum indefinitely A private equity firm like Slinger Wayne, however, is not interested in owning a company for long, and plans to sell Carambola at the end of three years for approximately 10 times Carambola's free cash flow in that year. The current spot exchange rate is Lp15.3271/8, but the Honduran inflation rate is expected to remain at a relatively high rate of 16.5% per annum compared to the US dollar inflation rate of only 5.5% per annum. Slinger Wayne expects to earn at least a 21% annual rate of return on international investments like Carambola a. What is Carambola worth if the Honduran lempira were to remain fixed over the three-year investment period? b. What is Carambola worth if the Honduran Lempira were to change in value over time according to purchasing power party? a. Calculate the free cash flows in Honduran Lempiras (Lp) below. (Round to the nearest whole number) Year o Year 2 Year 3 Year 1 13,000,000 LP LP Carambola's expected free cash flow Expected sale value in year 3 Total expected cash flow Lp Lp Lp Lp LP Expected exchange rate (Lp/$) 15.3271 Enter any number in the edit fields and then click Check Answer Clear All Check Answer 5 parts remaining Javascriptorist. MacBook Air % 5 2 3 4 6 7 8 9 an E R T Y P

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