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present value

A software company earned 10 million this year. Suppose the growth rate of the software company and the interest rate are both constant and the software company will be business for years to come.

Determine the the value of the software company when:
1. the interest rate is 10% and profits grow by 4% per year
2 the interest rate is 10% and profits grow by 0% per year
3. the interest rate is 10% and profits decline by 4% per year

Solution Summary

Determine the the value of the software company.

$2.19