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The projected FCFs of an acquisition target is shown below. You would like to estimate its maximum acquisition price at a 10% discount rate and
The projected FCFs of an acquisition target is shown below. You would like to estimate its maximum acquisition price at a 10% discount rate and a terminal value in year 3 based on the perpetual growth equation with a 5% perpetual growth rate.
Year | 1 | 2 | 3 |
FCF | -200 | 40 | 40 |
Find the target's maximum acquisition price.
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