File Home Insert Design Layout References Mailings Review View Help Acrobat Share Comments X Out [B Copy Peste Format Painter Clipboard Calibri (Dody: 12 AA Aay A A BIUXX APA Title Dictate Sensitivity Find y + 1 / T AaBbcc Aabbcc Aabba Abbcec AaB Replace 1 Normal 1 No Spac. Heading 1 Heading 2 Select Paragraph Styles Edong ...1...1...1...2...1...3.......................7.. Question 2 (12 marks) Create and Share Request Adobe PDF Signatures Adobe Acrobat Fort Voce Sensity 1 ...1.. You are an analyst working for Bear Stearns, and you are trying to value the growth potential of a large, established company, High Growth Industries. High Growth Industries has a thriving R&D division that has consistently turned out successful products. You estimate that, on average, the division launches two projects every three years, so you estimate that there is a 58% chance that a project will be produced every year. Typically, the investment opportunities the R&D division produces require an initial investment of $10.0 million and yield profits of $1.00 million per year that grow at one of three possible growth rates in perpetuity: 1.0%, 2.0%, and 3.0%. All three growth rates are equally likely for any given project. These opportunities are always take it or leave it opportunities. If they are not undertaken immediately, they disappear. Assume that the cost of capital will always remain at 11.5% per year. What is the present value of all future growth opportunities High Growth Industries will produce? Start typing here (12 marks) Page 5 of 15 40 of 2519 words English (Australia) af Fas TE 1 + 1004 File Home Insert Design Layout References Mailings Review View Help Acrobat Share Comments X Out [B Copy Peste Format Painter Clipboard Calibri (Dody: 12 AA Aay A A BIUXX APA Title Dictate Sensitivity Find y + 1 / T AaBbcc Aabbcc Aabba Abbcec AaB Replace 1 Normal 1 No Spac. Heading 1 Heading 2 Select Paragraph Styles Edong ...1...1...1...2...1...3.......................7.. Question 2 (12 marks) Create and Share Request Adobe PDF Signatures Adobe Acrobat Fort Voce Sensity 1 ...1.. You are an analyst working for Bear Stearns, and you are trying to value the growth potential of a large, established company, High Growth Industries. High Growth Industries has a thriving R&D division that has consistently turned out successful products. You estimate that, on average, the division launches two projects every three years, so you estimate that there is a 58% chance that a project will be produced every year. Typically, the investment opportunities the R&D division produces require an initial investment of $10.0 million and yield profits of $1.00 million per year that grow at one of three possible growth rates in perpetuity: 1.0%, 2.0%, and 3.0%. All three growth rates are equally likely for any given project. These opportunities are always take it or leave it opportunities. If they are not undertaken immediately, they disappear. Assume that the cost of capital will always remain at 11.5% per year. What is the present value of all future growth opportunities High Growth Industries will produce? Start typing here (12 marks) Page 5 of 15 40 of 2519 words English (Australia) af Fas TE 1 + 1004