You are evaluating the potential purchase of a small business currently generating $40,500 of after tax cash flow (Do =$40,500). On the basis of a review of similar risk investment opportunties you ust earn a rate of return of 15% on the proposed purchase. becasuse you are relatiely uncertain about future cash flows you decide to estimate the firm's value using two possible assumptions about the rowth rate of cash flows.

a: what is the firm's value if cash flows are expected to gow at an annual rate of 0% from now to infinity?

b: what is the firm's value if cash flows are expected to grow at a constant rate of 7% from now to infinity?

c: what is the firm's value if cash flows are expected to grow at an annual rate of 12% for the first 2 years followed by a constant annual rate of 7% from year 3 to infinity?