LMN Corporation has projected that their performance for the next five years will result to the following (see table below). The corporation owns a property originally acquired at P5 million with useful life of 10 years. The terminal value was assumed based on the growth rate of the cash flows. Capital investment is needed on Year 1 amounting to P1 million. Income tax rate is at 30%. The required rate of return for this business is 12%. Calculate the maximum price at which an investor will purchase 40% of LMN Corporation (round the growth rate to four decimal point).
LMN Corporation has projected that their performance for the next five years will result to the following (see table below). The corporation owns a property originally acquired at P5 million with useful life of 10 years. The terminal value was assumed based on the growth rate of the cash flows. Capital investment is needed on Year 1 amounting to P1 million. Income tax rate is at 30%. The required rate of return for this business is 12%. Calculate the maximum price at which an investor will purchase 40% of LMN Corporation (round the growth rate to four decimal point).
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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1LMN Corporation has projected that their performance for the next five years will result to the following (see table below).
The corporation owns a property originally acquired at P5 million with useful life of 10 years. The terminal value was assumed based on the growth rate of the cash flows. Capital investment is needed on Year 1 amounting to P1 million. Income tax rate is at 30%. The required
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