You are doing the financial analysis of the impact of your firm buying Fake Company Nu....
You are doing the financial analysis of the impact of your firm buying Fake Company Nu. Based on the information Nu shared, 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 operating cash flows associated with the acquisition will grow at about 3.1% per year for the foreseeable future. Year 3 OCF is projected at $18.3 million. Your company's WACC is 11.0%. What is the best estimate of terminal value at the end of Year 3?
Homework Answers
What is the best estimate of terminal value at the end of Year 3
=(18.3*(1+3.1%))/(11.0%-3.1%)
=238.83 million
the above is answer..
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please don't want to answer this question, please don't.
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