You are the CEO of a very popular social networking firm. You just announced that this year's earnings are $1 billion. Analysts predict your earnings will grow at 20% each year for the next three years (years 1 - 3) and then earnings growth will slow to 2% per year (starting in year 4) and will continue growing at 2% in perpetuity. 

Assuming r = 8%, what is the present value of your future (not counting this year) projected earnings?

Answer rating: 100% (QA)

To calculate the present value of the future projected earnings we need to discount each years earni... View the full answer