Estimate current value of firm using terminal value

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Reference no: EM131333955

Firm B is considering the acquisition of Firm Y. Firm B has estimated the cash flows, cost of capital, and growth rate for firm Y shown below. Using these estimates, estimate the current value of firm Y using the terminal value technique. WACC = 11%, g = 2% (assumed constant following year 4). Year 1 Year 2 Year 3 Year 4 CFF $900 $1,115 $1,240 $1,450 Check Answers: TV4 = $16,433, Firm Y Estimated Value = $14,403

Reference no: EM131333955

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