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The following table shows the projected free cash flows of an acquisition target. The potential acquirer wants to estimate its maximum acquisition price at
The following table shows the projected free cash flows of an acquisition target. The potential acquirer wants to estimate its maximum acquisition price at an 8 percent discount rate and a terminal value in year 5 based on the perpetual growth equation with a 4 percent perpetual growth rate. Year 2 3 4 5 Free cash flow -840 -420 224 748 a. Estimate the target's maximum acquisition price. (Do not round Intermedlate calculatlons. Round your answer to the nearest whole dollar amount.) Maximum acquisition price b. Estimate the target's maximum acquisition price when the discount rate is 7 percent and the perpetual growth rate is 5 percent. (Do not round Intermedlate calculations. Round your answer to the nearest whole dollar amount.) Maximum acquisition price
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