Bay Properties is considering starting a commercial real estate division. It has prepared the following four-year forecast of free cash flows for this division Year 2 Year 3 $12,000 $99,000 Free cash flow Year 1 -$185,000 Year 4 $240.000 Assume cash flows after year 4 will grow at 3% per year, forever. If the cost of capital for this division is 14%, what is the continuation value in year 4 for cash flows after year 47 What is the value today of this division? What is the continuation value in year 4 for cash flows aher year 47 The continuation value is $(Round to the nearest dollar)

Bay Properties is considering starting a commercial real estate division. It has prepared the following four-year forecast of free cash flows for this division Year 2 Year 3 $12,000 $99,000 Free cash flow Year 1 -$185,000 Year 4 $240.000 Assume cash flows after year 4 will grow at 3% per year, forever. If the cost of capital for this division is 14%, what is the continuation value in year 4 for cash flows after year 47 What is the value today of this division? What is the continuation value in year 4 for cash flows aher year 47 The continuation value is $(Round to the nearest dollar)

Name: Ef 588. Bay Properties is considering starting a commercial real estat
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Description: Ef 588. Bay Properties is considering starting a commercial real estate division. It has prepared the following four-year forecast of free cash flows for this division:Year 1Year 4-$185,000$240,000Year 2$12,000Year 3$99,000Free cash flowAssume cash f

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 22E

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