A firm has projected free cash flows of $575,000 for Year 1, $625,000 for Year 2, and 750,000 for Year 3. The projected terminal value at the end of Year 3 is $8,000,000. The firm’s Weighted Average cost of Capital (WACC) is 12.5%.
- Determine the Discounted Cash Flow (DCF) value of the firm.
- Recommend acceptance of this project using net present value criteria.
- Display your calculations.