3. The accounting department head of MOOG Controls Phils. has asked his financial manager to provide a pro forma statement of the company's "value" under a variety of prospective expansion scenarios, wvith the assumption that the company's many divisions will always be a single entily. The company's manager Is concemed because, despite the fact that the company's competitors are few, their yearly sales growth has topped 60% in each of the last five years. The accounting department head advised that the valuation estimates be based on the company's profits of Php5.2 billlon (which have yet to be paid out to investors) and the average interest rate over the past 20 years (7 percent) in each of the following profit growth scenarios: A. 5.5% annual growth rate of profits. B. 2.8% annual growth rate of profits. C. 0% annual growth rate of profits. D. 10.25% annual growth rate of profits.

3. The accounting department head of MOOG Controls Phils. has asked his financial manager to provide a pro forma statement of the company's "value" under a variety of prospective expansion scenarios, wvith the assumption that the company's many divisions will always be a single entily. The company's manager Is concemed because, despite the fact that the company's competitors are few, their yearly sales growth has topped 60% in each of the last five years. The accounting department head advised that the valuation estimates be based on the company's profits of Php5.2 billlon (which have yet to be paid out to investors) and the average interest rate over the past 20 years (7 percent) in each of the following profit growth scenarios: A. 5.5% annual growth rate of profits. B. 2.8% annual growth rate of profits. C. 0% annual growth rate of profits. D. 10.25% annual growth rate of profits.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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