Problem $6-20$ Inflation and Company Value

Sparkling Water, Incorporated, expects to sell $3\mathrm{.}7$ million bottles of drinking water each

year in perpetulty. This year each bottle will sell for $$1\mathrm{.}46$ in real terms and will cost $$\mathrm{.}82$

In real terms. Sales income and costs occur at year$-$end. Revenues will rise at a real rate

of $1\mathrm{.}6$ percent annually, while real costs will rise at a real rate of $1\mathrm{.}1$ percent annually. The

real discount rate is $7$ percent. The corporate tax rate is $21$ percent. What is the company

worth today? $($Do not round Intermedlate calculations and enter your answer In

dollars, not milllons of dollars, rounded to the nearest whole number, e$.$g$.,1,234,567.)$

Value of the firm