GRJ Corp just reported 10 million in after tax earnings and
GRJ Corp. just reported $10 million in after-tax earnings and management expects to grow at 3% in perpetuity with a weighted average cost of capital of 13%:
a. How would you value GRJ using a growing perpetuity formula?
b. If GRJ’s market capitalization is $100 million, what does this say about the market’s perception of management’s growth and/or cost of capital expectations?
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