hey im kind of confused as to why the 8% increase in cash flows were used in calculating the market value of the manufacturing business unit . my reasoning behind this is the 8% increase is only a result of the future mbo and so has no impact on current market value of the business unit. i used the 435 / .1 as a pose the the answer which was 435 x 1.08 / .1 . thanks for any response
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march/june 2017 Chrysos
8y ago#1No - the answer is correct. The value placed on it for the MBO (and therefore the amount to pay) will be based on the future expectations.
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