Please show steps on how to solve and justify my answer for the below:

Bikini Swim Manufacturing is interested in acquiring One Piece Swim. BikiniSwim

anticipates that One Piece Swims after-tax free cash flow in the first year following the closing date for

the acquisition will be $125 million and that it will grow thereafter at the rate of 10% per year

for the next 5 years. Bikini Swim WACC for the acquisition is 12%. Its investment banker

estimates that the perpetuity growth rate for calculating the terminal value is 2% per year.

*State what is one piece swims annual free cash flow stream for years 1 through 6.

-Estimate the terminal value for the acquisition using the Gordon growth model.

-Estimate one piece swim enterprise value.

-Bikini swim believes it can acquire one piece for $1.6 billion (including assuming its debt).Should Bikini Swim proceed with the acquisition?