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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

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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 15 million 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 Singer 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 umet Carambola's free cash flow in that year. The current spot exchange rate is Lp 14.7652/5, but the Honduran inflation rate is expected to remain at a relatively high rate of 17 0% per annum compared to the US dollar inflation rate of only 5.0% per annum. Slinger Wayne expects to earn at least a 20% annual rate of retum on international Investments like Carambola a. What is Carambola worth it the Honduran Lempira were to remain fixed over the three-year investment period? b. What is Carambola worth the Honduran Lempira were to change in value over time according to purchasing power party? Calculate the free cash flows in Honduran tempiras (LP) below: (Round to the nearest whole number.)

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