You forecast the future cash flow of Jaffe Ltd, a young growing company. You expect fast growth through the first four years, at which time the company will mature and you expect it to grow by 2% per year forever more after. The following are the forecast cash flows: Year 1: $5 million Year 2: $10 million Year 3: $15 million Year 4: $20 million Year 5: $20.4 million Year 6: $20.808 million Year 7 onward: continued growth at 2% per year The discount rate is 9%. What is the value of Jaffe today at Year 0? (Do not round intermediate calculations. Report your result in millions of dollars. Round the final answers to 2 decimal places. Omit $ sign and the word "million" in your response. For example, if your answer is $1,234,567 just write 1.23.) Numeric Response

You forecast the future cash flow of Jaffe Ltd, a young growing company. You expect fast growth through the first four years, at which time the company will mature and you expect it to grow by 2% per year forever more after. The following are the forecast cash flows: Year 1: $5 million Year 2: $10 million Year 3: $15 million Year 4: $20 million Year 5: $20.4 million Year 6: $20.808 million Year 7 onward: continued growth at 2% per year The discount rate is 9%. What is the value of Jaffe today at Year 0? (Do not round intermediate calculations. Report your result in millions of dollars. Round the final answers to 2 decimal places. Omit $ sign and the word "million" in your response. For example, if your answer is $1,234,567 just write 1.23.) Numeric Response

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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