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Problem 7-17 Value of Operations Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and

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Answer #1

a.

Terminal Value = 100,000(1.07)/(0.14 - 0.07)

Terminal Value = $1,528,571.43

b.

Value of Operations = 80,000/(1.14) + (1,528,571 + 100,000)/(1.14)2

Value of Operations = $1,323,307.94

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