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Value of a company

What is the approximate value of a company that earns $5 this year if you wish to earn a 10% return and the companys earnings are expected to grow at 5%?

a. $50
b. $75
c. $100
d. $150

What is the approx value of a company that earns $5.00 this yar if you wish to earn a 10% return and the comapny's earnings are expected to decline by 3% per year?

a. $0
b. $38.50
c. $50
d. $61.33

Solution Preview

1. Use the constant growth formula to calculate the value. The value of the ...

Solution Summary

The solution explains how to calculate the value of a company

$2.19