You are running a hot Internet company. Analysts predict that its earnings will grow at 10% per year for the next five years. After that, as competition increases, earnings growth is expected to slow to 3% per year and continue at that level forever. Your company has just announced earnings of $4 million. What is the present value of all future earnings if the interest rate is 9%? (Assume all cash flows occur at the end of the year.) The present value is $ million. (Round to two decimal places.) ...
You are running a hot Internet company. Analysts predict that its earnings will grow at 10% per year for the next five years. After that, as competition increases, earnings growth is expected to slow to 3% per year and continue at that level forever. Your company has just announced earnings of $4 million. What is the present value of all future earnings if the interest rate is 9%? (Assume all cash flows occur at the end of the year.) The present value is $ million. (Round to two decimal places.) ...
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
Problem 1PS
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![You are running a hot Internet company. Analysts predict that its earnings will grow at 10% per year for the next five years. After that, as
competition increases, earnings growth is expected to slow to 3% per year and continue at that level forever. Your company has just announced
earnings of $4 million. What is the present value of all future earnings if the interest rate is 9%? (Assume all cash flows occur at the end of
the year.)
The present value is $ million. (Round to two decimal places.)
...](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3b04f29a-3607-4b6c-8d9a-93bc9b7f7a8f%2F7b5baaa7-cc2e-4ecd-b75c-b32190223f49%2Fk8j5yjd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:You are running a hot Internet company. Analysts predict that its earnings will grow at 10% per year for the next five years. After that, as
competition increases, earnings growth is expected to slow to 3% per year and continue at that level forever. Your company has just announced
earnings of $4 million. What is the present value of all future earnings if the interest rate is 9%? (Assume all cash flows occur at the end of
the year.)
The present value is $ million. (Round to two decimal places.)
...
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