The sales in the first year, R, are $100 and they grow every year at a growth rate of g = 12%. Also, suppose that the net margin is 40%. This means that earnings in the first year are going to be 0.4*100 = $40. Assuming that the discount rate,d, is 25%. What is the net present value of earnings assuming a life of 20 years? Note that P takes 5% equity. What is the minimum growth rate so that it is profitable for E to go on the show?

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What is the net present value of earnings assuming a life of 20 years Note that P takes 5 equity ANS... View the full answer