In Example 1-1 based on Cornell ’ s (2001) study of Intel Corporation, in which Cornell valued Intel using a present value model of stock value, we wrote:

“ What future revenue growth rates were consistent with Intel ’ s stock price of $ 61.50 just prior to the release, and $ 43.31 only fi ve days later? Using a conservatively low discount rate, Cornell estimated that the price of $ 61.50 was consistent with a growth rate of 20 percent a year for the subsequent 10 years (and then 6 percent per year thereafter). ”

A. If Cornell had assumed a higher discount rate, would the resulting revenue growth rate estimate consistent with a price of $ 61.50 be higher or lower than 20 percent a year?

B. Explain your answer to Part A.