Question: I need help with letter C. Question Help On the basis of a review Common stock vale-All growth models Personal Finance Problem You are evaluating
Question Help On the basis of a review Common stock vale-All growth models Personal Finance Problem You are evaluating the potential purchase of a small business currently generating S47,500 of after-tax cash fow (Da $47,500) sindar k investent opportunities you must eam a rabe of rehum of 15% on the proposed purchase Because you are relatively uncertain about future cash Sows, you decide to estimate the firm's value using two possibler ons abd the growth rae of cash Sows aWhatis te ms valeEcash ous are epeced to grow at an annual rate of 0% fom now o ininity What s the Sms value cash ows ane epecded to grow at a constant raber What is the 's vahue cah fos are expected to grow at an annual rate of 11% for the frt 2 years, followed by a constant 16 % from now to infinity? ual rate of 6% rom year 3 to infinty? a The f'sval cash ows a epected to grow at an anual rae of 0% fom now to infinity s $ 316667(Round to the nea dollar bhe Ss cotant rate of 6% from now to infinity is $ 559444 cah o ae pected to growat Round to the nerest dollar ) e s aech on n epeded o gwt an a ate of 11% for the frt 2 years folowed by a constant annual rate of 6% from year 3 to infinity is (Round to the nearest dollar)
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