The expert on behalf of the shareholders used the 2% growth rate. Think about the growing perpetuity formula used in a terminal value: Growing Perpetuity Formula A higher terminal growth rate will decrease the denominator, leading to a higher terminal value, which should lead to a higher overall valuation. In fact, the court felt that both were too low and suggested that 3% would better match the overall rate of GDP growth. The expert for the shareholders derived a beta by analyzing Dell's peer companies and their betas, then used an equity risk premium of 5.5%. The expert for Silver Lake and Michael Dell analyzed weekly observations of Dell's stock price and compared it to the market, then used a 6.4% equity risk premium. How do you think those changes would affect the final valuation

Answer rating: 100% (QA)

The changes mentioned would likely have significant impacts on the final valuation of the company Le... View the full answer