Using the Discounted Cash Flow method and the formula approach with formula 9.3a

Question

Using the Discounted Cash Flow method and the formula approach with formula 9.3a (pp. 248) of the textbook, calculate the maximum price that should be paid for target company %u2013 Huntington Corporation. Note that this company has 5 years of super normal growth and then no growth. (15 pts. for PV of operating cash flows, and 15 pts. for the PV of horizon value.)
Given information re Huntington Corporation (all $ Amounts in Millions):
Ro: Initial Year Revenues:                                           $1,000
n = Number of growth years:                                          5
m = Net Operating Income Margin                                    15.0%
T = Tax Rate                                                               40.0%
g = Growth Rate                                                           18.0%
I = Investment Rate                                                      8.0%
k = Cost of Capital                                                        13.20%
h = Calculation Relationship = [(1 + g)/(1 + k)] %u2013 1             0.0424   

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Explanation / Answer

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Please provide me the formulae 9.3 (pp 248)

and clarufy some symbols

your problem is done!

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