Terminal Value Analysis: If Dupont chooses the "growth" strategy, we will assume that the production will continue indefinitely. Therefore, you must come up with an approach to calculating the terminal value. You will assume a terminal, perpetual growth rate of cash flows (it is up to you - justify your choice). Explain your terminal growth formula (effectively calculating the present value of all of the perpetual stream of cash flows after 1985), properly accounting for the time-delay. Note that you are not given (and do not have the info to estimate) the discount rate (which is the same as the "hurdle rate," to which you compare the internal rate of return, IRR). Therefore, you will not be able to directly calculate a terminal value - you will choose a growth rate (9), but will not have a single discount rate (r) to plug-in to the formula. (More about that below) Implement your formula in the Excel workbook -provide any explanation in your submitted Word document ?

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To calculate the terminal value using a perpetual growth rate of cash flows you can use the Gordon G... View the full answer