Instructor key — Module 5: Terminal Value, Present Value, and Sensitivity Analysis
Instructor/solutions version. Keep separate from the student assignment during assessment.
Calculation solution
Next terminal-year UFCF is 420, discount rate 19%, perpetual growth 1%. Calculate terminal value at the preceding year-end.
Calculated result: 2,333.33333333 ($000, except where the question requests a ratio or return). Divide 420 by 0.19 minus 0.01; this is not yet discounted to an earlier valuation date. Use appropriate display rounding while retaining formula precision. This result is generated from the independent assignment inputs, not copied from the chapter answer.
Conceptual and judgment marking
A complete conceptual response identifies the measure's economic purpose, the defined perimeter and the risk of confusing it with another metric. Award up to 20 points for explanation, not terminology alone. For the applied question, award up to 15 for linking evidence to a concrete acquisition consequence; do not require an optimistic recommendation.
Spreadsheet marking
Award 15 of the 30 spreadsheet points for live links from assumptions, 10 for a coherent 10% mutation and predicted direction, and 5 for units, readable formatting and checks. Inspect formulas directly rather than accepting cached numbers. Use the instructor workbook for the controlling capstone model; this independent lab uses different inputs.
Calculation marking: 10 points for the correct equation/perimeter, 15 for intermediate arithmetic, and 10 for result, units and rounding. Overall pass requires 80 and all critical checks in the student version.
Original chapter practice solutions
The following solutions were moved out of the chapter so full answers no longer sit immediately below student questions. Match them in order to the chapter's practice problems.
Answer: 1,666.7 and 1,500.0 respectively. These are values at the terminal date, still requiring discounting if that date lies in the future.