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Your selected company is projecting that free cash flows for the next three (3) years will increase by 3% annually. Using the Most Recent Year's
Your selected company is projecting that free cash flows for the next three (3) years will increase by 3% annually. Using the Most Recent Year's free cash flows from Question 1 above, increase each of the future free cash flows by 3% (will self-populate in the yellow highlighted cells). As there is a chance that these increases may not occur as projected, a buyer who may be willing to purchase the company before the increases occur, will account for this risk by using a required rate of return of 7%. What price would the potential buyer be willing to pay based upon the known free cash flows and the future projected free cash flows? The company is PepsiCo
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