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The following table shows the projected free cash flows of an acquisition target

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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 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 1 2 3 4 5

free cash flow -910 -455 0 266 832                        

Part #1 max acquisition price:                      

Part #2 new disc. rate 7 and new perpetual rate 5                    

max acquisition price: