Current value of firm using terminal value technique

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Reference no: EM13881040

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.

_____Year 1 Year 2 Year 3 Year 4

CFF: $900; $1,115; $1,240; $1,450

WACC = 11%, g = 2% (assumed constant following year 4). Show all work.

Reference no: EM13881040

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