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"How much do your calculations change if you do not assume perpetual growth, but instead assume grwoth of X% for 10 years (for example), followed by perpetual growth at a lower rate (say 5% or 3%)?"

In the situation where the unidentified \$1,000,000 (on top of I-Banker and Attorney fees) in saves were realized pronto, the perpetual growth rate was less than 5%. Since I enjoy cooking up numbers and you left me with little in terms of specifics, I cooked up the following scenarios. In all examples, I'm using a 13% discount rate per annum and I'm discounting by half-year, assuming the cash comes in over the course of the year (which may not be valid in a spot-on analysis with the cash lagging on accrued revenue). In all scenarios, I solved to realize a present value of \$68,000,000.

Scenario 1

Other than the I-banker and Legal Fees, there are no synergies. Cash Flow at time .5 = \$3.5 mil and at time 1.5 = \$4.7 mil.

3% Perpetuity: Cash flow from years 2-10 must grow at 10% to break even.
4% Perpetuity: Cash flow from years 2-10 must grow at 9% to break even.
5% Perpetuity: Cash flow from years 2-10 must grow at 8% to break even.

Scenario 2

Other than the I-banker and Legal Fees, there are incremental synergies totaling \$1 mil. Cash Flow at time .5 = \$3.5 mil and at time1.5 = \$5.7 mil.

3% Perpetuity: Cash flow from years 2-10 must grow at 7% to break even.
4% Perpetuity: Cash flow from years 2-10 must grow at 6% to break even.
5% Perpetuity: Cash flow from years 2-10 must grow at 5% to break even.

Hopefully that effectively demonstrates the change. I'm more inclined to say scenario 2 should be closer to realistic expectation levels.

Incidentally, did you follow what I meant by nominal versus real? I simply meant that inflation will account for 3% reported growth (assuming constant margins). If that's the case, the 3% growth scenario assumes that there is zero real expansion.

Cheers,

Nate