ZuoTi.Pro
Question

with no discount rate given, must be assumed. If I invest 3 million dollars, and I...

with no discount rate given, must be assumed. If I invest 3 million dollars, and I believe I will have sales of 100k in the first year and after that sales will increase by 25% per year for the next 3 years. After that sales will grow at a constant 3% rate forever. Market risk premium of 4.4% Should I make this investment? Why or why not?

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

9 Sales 100 125 156 195 12 Perpetual value at the end of year 4 13 195 (1+g)/(k-g) 195 (1.03)/(4.4-3.0) 14346 16 Total cashfl

0 0
Add a comment
Know the answer?
Add Answer to:
with no discount rate given, must be assumed. If I invest 3 million dollars, and I...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • If I invest 3 million dollars, and I believe I will have sales of 100k in...

    If I invest 3 million dollars, and I believe I will have sales of 100k in the first year and after that sales will increase by 25% per year for the next 3 years. After that sales will grow at a constant 3% rate forever. Market risk premium of 4.4%. 1 year tbill yield curve of 2.6%. Beta is .52. Should I make this investment? Why or why not?

  • If I invest 3 million dollars, and I believe I will have sales of 100k in...

    If I invest 3 million dollars, and I believe I will have sales of 100k in the first year and after that sales will increase by 25% per year for the next 3 years. After that sales will grow at a constant 3% rate forever. Market risk premium of 4.4%. 1 year tbill yield curve of 2.6%. Beta is .52. Should I make this investment? Why or why not?

  • If Microsoft decides to invest 3 million dollars, and believes it will have sales of 100k...

    If Microsoft decides to invest 3 million dollars, and believes it will have sales of 100k in the first year and after that sales will increase by 25% per year for the next 3 years. Also, after those 3 years sales will then grow at a constant 3% rate forever. Market risk premium of 4.4% Should I make this investment? Why or why not?

  • If Microsoft decides to invest 3 million dollars, and believes it will have sales of 100k...

    If Microsoft decides to invest 3 million dollars, and believes it will have sales of 100k in the first year and after that sales will increase by 25% per year for the next 3 years. Also, after those 3 years sales will then grow at a constant 3% rate forever. Market risk premium of 4.4%. Beta .52. Yearly T Bill rate of 2.6% Should I make this investment? Why or why not? Please show NPV and Cash flow formulas.

  • The risk-free rate is 1.14% and the market risk premium is 5.45% Astock with a 3...

    The risk-free rate is 1.14% and the market risk premium is 5.45% Astock with a 3 of 1.53 just paid a dividend of $2.07 The dividend is expected to grow at 22.46% for three years and then grow at 3.45% forever. What is the value of the stock? Submit Answer format: Currency: Round to: 2 decimal places. The risk-free rate is 2.36% and the market risk premium is 7.05%. A stock with a ß of 1.18 just paid a dividend...

  • The risk-free rate is 3.96% and the market risk premium is 9.00%. A stock with a...

    The risk-free rate is 3.96% and the market risk premium is 9.00%. A stock with a β of 1.19 just paid a dividend of $2.84. The dividend is expected to grow at 20.37% for three years and then grow at 4.84% forever. What is the value of the stock? Submit Answer format: Currency: Round to: 2 decimal places. unanswered not_submitted #3 The risk-free rate is 3.70% and the market risk premium is 7.42%. A stock with a β of 1.32...

  • The market price of a share of preferred stock is $23.71 and the dividend is $2.40....

    The market price of a share of preferred stock is $23.71 and the dividend is $2.40. What discount rate did the market use to value the stock? Suppose the risk-free rate is 1.43% and an analyst assumes a market risk premium of 7.51%. Firm A just paid a dividend of $1.49 per share. The analyst estimates the β of Firm A to be 1.22 and estimates the dividend growth rate to be 4.61% forever. Firm A has 286.00 million shares...

  • 20 The risk-free rate is 3.96% and the market risk premium is 9.00%. A stock with...

    20 The risk-free rate is 3.96% and the market risk premium is 9.00%. A stock with a β of 1.19 just paid a dividend of $2.84. The dividend is expected to grow at 20.37% for three years and then grow at 4.84% forever. What is the value of the stock? Answer format: Currency: Round to: 2 decimal places. #3 The risk-free rate is 3.70% and the market risk premium is 7.42%. A stock with a β of 1.32 just paid...

  • Bruin Inc. will have earnings of $15 million next year and is projected to grow at...

    Bruin Inc. will have earnings of $15 million next year and is projected to grow at a constant rate of 6 percent forever. All earnings are paid out as dividends to shareholders. The company plans to launch a new project three years from now that will cost $10 million. The project will increase the firm's annual earnings by a constant $8.3 million every year forever starting one year later (i.e. 4 years from now). What is the market value of...

  • If I invest 3 million. I will earn an additional 400k for the next decade. Should...

    If I invest 3 million. I will earn an additional 400k for the next decade. Should I make this investment? Why?

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT