The following table shows the projected free cash flows of an acquisition target. The potential acquirer wants to estimate its maximum acquisition price at an 8 percent discount rate and a terminal value in year 5 based on the perpetual growth equation with a 4 percent perpetual growth rate. Year 1 2 3 4 5 Free cash flow –$990 –$495 $0 $200 $700 a. Estimate the target’s maximum acquisition price. b. Estimate the target’s maximum acquisition price when the discount rate is 7 percent and the perpetual growth rate is 4 percent. c. What is the percentage change in the maximum acquisition price when the discount rate is reduced one percentage point and the perpetual growth rate is increased one percentage point?