What is the best estimate of terminal value

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You are doing the financial analysis of the impact of your firm buying Fake Company Delta. Based on the information Delta shared with you, you can get a projected income statement and cash flows out three years. After year three, revenues, profits, and cash will continue to be generated from the acquisition, of course, but there is no way to get to income and expenses details with any degree of credibility. Instead, you determine that it is very credible that net incremental cash flows associated with the acquisition will grow at about 4.6% per year for the foreseeable future. Year 3 net increment cash flow is projected at $11.9 million. Your company's WACC is 10.4%. What is the best estimate of terminal value?

Reference no: EM132281247

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