Compute the residual value using the competitive markets

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Project free cash flows for the next five years, 1996-2000. Estimate the residual value at the end of year 5 using both the perpetuity with growth and competitive markets (PVGO = 0) assumptions. For the perpetuity with growth formula, you need to figure out the year T when FCF growth stabilizes.2 Use the same year T to compute the residual value using the competitive markets approach.

Reference no: EM133557973

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