Squirrel Spring Water, Inc., expects to sell 7.3 million bottles of drinking water each year in perpetuity.

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Squirrel Spring Water, Inc., expects to sell 7.3 million bottles of drinking water each year in perpetuity. This year, each bottle will sell for $1.24 in real terms and will cost $.83 in real terms. Sales and costs occur at year-end. Revenues will rise at a real rate of 2 percent annually, while real costs will rise at a real rate of 1.5 percent annually. The real discount rate is 6 percent. The corporate tax rate is 21 percent. What is the company worth today?

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Corporate Finance Core Principles And Applications

ISBN: 9781260571127

6th Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan

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