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, with the assumption that the company's many divisions will always be a single entity. The company's manager is concerned 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 billion (which have yet to be paid out to investors) and the average interest rate over the past 20 years (7 percent) in the following profit growth scenario: A. 5.5% annual growth rate of profits.
(
The accounting department head of MOOG Controls Phils. has asked his
A. 5.5% annual growth rate of profits.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
