Homework Answers
Answer : $31.79 million
Calculation :
| Year & Particular | Cash flow / Terminal value | Present Value Factor @ 14% | Present Value |
| Year 1 ( Cash Flow ) | 4 | 0.877192982456 | 3.508771929824 |
| Year 2 ( Cash flow ) | 4 | 0.769467528470 | 3.077870113881 |
| Year 3 ( Cash flow ) | 4 | 0.674971516202 | 2.699886064808 |
| Year 3 ( Terminal Value ) | 33.33 => [ 4 / ( 0.14 - 0.02 ) ] | 0.674971516202 | 22.49905053984 |
| Total | 31.78557864835 |
Value of company = $ 31.78557864835 or $ 31.79
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