Question: a. Estimate the target's maximum acquisition price. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) Maximum acquisition price: b.

a. Estimate the target's maximum acquisition price. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

Maximum acquisition price:

b. Estimate the target's maximum acquisition price when the discount rate is 7 percent and the perpetual growth rate is 5 percent. (Do

not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

Maximum acquisition price:

The following table shows the projected free cash flows of an acquisition target. The potential acquirer wants to estimate its maximum acquisition price at an 8 percent discount rate and a terminal value in year 5 based on the perpetual growth equation with a 4 percent perpetual growth rate. Year Free cash flow 2 -850 -425 3 4 5 230 760

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