Small Hours LLC, a music events firm based in Dubai, expects to sell 10,000 festival tickets for
Question:
Small Hours LLC, a music events firm based in Dubai, expects to sell 10,000 festival tickets for different musical events around the world in perpetuity. This year, the average ticket will sell for AED300 in real terms. The total cost of running a festival is AED2 million and each festival will attract an average of 10,000 people.
Sales income and costs occur at year-end. Revenues will rise at a real rate of 7 per cent annually, while real costs will rise at a real rate of 5 per cent annually. The real discount rate is 18 per cent. There is no corporate tax in Dubai. What is Small Hours LLC worth today?
Step by Step Answer:
Corporate Finance
ISBN: 9780077173630
3rd Edition
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe