Question: You are running a hot Internet company Analysts predict that

You are running a hot Internet company. Analysts predict that its earnings will grow at 30% per year for the next five years. After that, as competition increases, earnings growth is expected to slow to 2% per year and continue at that level forever. Your company has just announced earnings of $1,000,000. What is the present value of all future earnings if the interest rate is 8%?
(Assume all cash flows occur at the end of the year.)

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  • CreatedAugust 06, 2014
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