Sparkling Water, Inc., expects to sell 3.8 million bottles of drinking water each year in perpetuity. This

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Sparkling Water, Inc., expects to sell 3.8 million bottles of drinking water each year in perpetuity. This year each bottle will sell for $1.52 in real terms and will cost $.87 in real terms. Sales income and costs occur at year-end. Revenues will rise at a real rate of 1.3 percent annually, while real costs will rise at a real rate of .9 percent annually. The real discount rate is 6 percent. The corporate tax rate is 21 percent. What is the company worth today?

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Corporate Finance

ISBN: 9781265533199

13th International Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

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