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A financial analyst with MTC International has estimated the annual after-tax free cash flow from a proposed merger to be $1.5 million. This cash flow is expected to continue for 10 years.

For the following 5 years, the free cash flow is estimated to be $0.7 million per year. MTC International feels that the appropriate risk-adjusted discount rate is 16 percent.

Calculate the present value of the expected free cash flows from the proposed merger through year 15.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92088323

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