Your company just recorded sales of $9 million for the last fiscal year. You expect sales to grow in real terms at 7% annual rate for the next three years. The inflation is expected to be 1% per year during the same period. The appropriate nominal discount rate is 9%. Assume that the first cash flow occurs exactly one year from today. (a) What are your expected sales revenue for the next three years, in nominal terms? Year 1: Year 2: Year 3: (b) What is the present value of your nominal sales revenue over the next three years? (c) What are your expected sales revenue for the next three years, in real terms? Year 1: Year 2: Year 3: (d) What is the present value of your real sales revenue over the next three years?

Your company just recorded sales of $9 million for the last fiscal year. You expect sales to grow in real terms at 7% annual rate for the next three years. The inflation is expected to be 1% per year during the same period. The appropriate nominal discount rate is 9%. Assume that the first cash flow occurs exactly one year from today. (a) What are your expected sales revenue for the next three years, in nominal terms? Year 1: Year 2: Year 3: (b) What is the present value of your nominal sales revenue over the next three years? (c) What are your expected sales revenue for the next three years, in real terms? Year 1: Year 2: Year 3: (d) What is the present value of your real sales revenue over the next three years?

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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4
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