GRJ Corp just reported $10 million in after tax earnings and management expects to grow at 3 in perpetuity with a weighted average cost of capital of 13 a How would you value GRJ using a growing perpetuity formula b If GRJs market capitalization is $100 million, what does this say about the markets...

10 M x 103 13 3 103M Using the terminal growth fo ...

GRJ Corp. just reported $10 million in after-tax earnings and management expects to grow at 3% in

Question:

GRJ Corp. just reported $10 million in after-tax earnings and management expects to grow at 3% in with a weighted average of 13%:
a. How would you value GRJ using a growing formula?
b. If GRJ’s market capitalization is $100 million, what does this say about the market’s perception of management’s growth and/or expectations?
Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Perpetuity
Perpetuity refers to payments that are made without an end or maturity date. A perpetuity is classified as an annuity, which is something that earns a dividend or receives a payment at a regularly scheduled interval, generally yearly. So, how...