Assume that some of the information relating to Gamma Systems Manufacturing Corporation has changed. Answer the following
Question:
A. How would your valuation estimate change if the sales growth rate had been 6 percent but the discount rate had been 20 percent?
B. How would your valuation estimate change if the sales growth rate had been 5 percent and the discount rate 18 percent?
C. How would your valuation estimate change if the perpetuity growth rate had been 7 percent and the discount rate 20 percent?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal... Perpetuity
Perpetuity refers to payments that are made without an end or maturity date. A perpetuity is classified as an annuity, which is something that earns a dividend or receives a payment at a regularly scheduled interval, generally yearly. So, how...
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Related Book For
Entrepreneurial Finance
ISBN: 978-0538478151
4th edition
Authors: J . chris leach, Ronald w. melicher
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