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% per year and continue at that level forever. You are running a hot Internet company...
You are running a hot Internet company. Analysts predict that its earnings will grow at 20% 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. Yo
You are running a hot Internet company. Analysts predict that its earnings will grow at 20% 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 $1 million. What is the present value of all future earnings if the interest rate is 8%? (Assume all cash flows occur at the end of the year.)
you are running a hot internet company . Analysts predict that its earnings will grow at...
you are running a hot internet company . Analysts predict that its earnings will grow at 40% per year for the next five years. After That, as competition increases, earnings growth is expected to slow to 5% per year and continue at that level forever. your company just announced earnings of 4 million$. What is the present value of all future earnings if the interest rate is 9%? The present value is --- Millions
Corporate Finance I You are running a hot Internet pharmacy company. Analysts predict that its earnings...
Corporate Finance I You are running a hot Internet pharmacy company. Analysts predict that its earnings will grow at 30% per year for the next five years. After that, as competition increases, earnings growth is expected to slow to 2% per year and continue at that level forever. Your company has just announced earnings of $1,000,000. What is the present value of all future earnings if the interest rate is 8%? (Assume all cash flows occur at the end of...
(1)Your firm has identified three potential investment projects. The projects and their cash flows are shown...
(1)Your firm has identified three potential investment projects. The projects and their cash flows are shown here (Project Cash Flow Today ($) Cash Flow in One Year ($)) A -10- 20 B 5 -5 C 20 -10 Suppose all cash flows are certain and the risk-free interest rate is 10%. a. What is the NPV of each project? b. If the firm can choose only one of these projects, which should it choose? c. If the firm can choose any...
a. A company promises to pay you, and your descendants, $400 per year forever. Your required...
a. A company promises to pay you, and your descendants, $400 per year forever. Your required rate of returm is 10 percent. What is the most you would pay for this perpetuity? PV-Payment/Interest rate b. Future Value: If you deposit $12,000 in the bank today, what will it be worth in 15 years at9 percent compound growth? What is the formula for this problem? c. Present Value: If you plan to receive $12,000 from the bank in 15 years, what...
You are trying to value ListoFact, a data processing company. The company generated $1 billion in revenues in the most recent financial year and expects revenues to grow 3% per year in perpetuity. It...
You are trying to value ListoFact, a data processing company. The company generated $1 billion in revenues in the most recent financial year and expects revenues to grow 3% per year in perpetuity. It generated $30 million in after-tax operating income in the most recent financial year and expects after-tax operating margin to increase 1% per year starting from the current year (Year 0) to year 3. After year 3, the margin will stabilize at year 3 levels forever. The...
Company just reported Earning Per Share of $50.00 (EPS0=$50) Management plans to continue to...
Company just reported Earning Per Share of $50.00 (EPS0=$50) Management plans to continue to payout 20% of net income in the form of dividends Before implementing any cost cutting initiatives, management expects earnings will continue to grow at a long term sustainable growth rate of10.0% every year in perpetuity The company’s cost of equity is 25% Assume Management does not attempt to cut costs and use the 10% earnings growth rate. Using the Dividend Discount Model...
You work for a pharmaceutical company that has developed a new drug. The patent on the...
You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the drug's profits will be $2 million in its first year and that this amount will grow at a rate of 2% per year for the next 17 years. Once the patent expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the present...
A company had $18 of sales per share for the year that just ended. You expect...
A company had $18 of sales per share for the year that just ended. You expect the company to grow their sales by 6.5 percent for the next five years. After that, you expect the company to grow 3.5 percent in perpetuity. The company has a 14 percent ROE and you expect that to continue forever. The company's net margins are 6 percent and the cost of equity is 11 percent. Use the free cash flow to equity model to...
You are the pension fund manager for a consulting company. Your workers will begin to retire...
You are the pension fund manager for a consulting company. Your workers will begin to retire 10 years from now. You estimate that you will need $1.2 million exactly 10 years from now to fund the first year payments. Due to inflation and growth in the number of retirees, your annual obligations will grow by 5% per year, and will continue forever. Your financial advisors tell you that you can plan on earning 8.0% per year on invested funds. (a)...
a. A company promises to pay you, and your descendants, $400 per year forever. Your required rate of returm is 10 percent. What is the most you would pay for this perpetuity? PV-Payment/Interest rate b. Future Value: If you deposit $12,000 in the bank today, what will it be worth in 15 years at9 percent compound growth? What is the formula for this problem? c. Present Value: If you plan to receive $12,000 from the bank in 15 years, what...
You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the drug's profits will be $2 million in its first year and that this amount will grow at a rate of 2% per year for the next 17 years. Once the patent expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the present...
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