Question
1. When you are valuing a company, the usual methodology is to forecast near-term cashflows based on available information and use the............ formula beyond that
1.
When you are valuing a company, the usual methodology is to forecast near-term cashflows based on available information and use the............ formula beyond that to estimate the terminal value. For example, if you forecast that a company would earn $1.0 million, $1.1 million, $1.2 million, $1.3 million and $1.4 million for five years in that order, expect 10% growth thereafter and use a discount rate of 18%, the present value of the company as it currently operates would be $.................. million (one decimal place).
2.
Concepts learned in finance can be put to everyday use, for example, figuring out how much you should pay for a house. If your current annual rent payment is $12,000, and you expect that to increase by 3 percent each year, and you believe that............... percent is the appropriate discount rate, you would be happy to pay $12,000,000 for a comparable house (Since there's typically not much difference between twenty/thirty year of cashflows and perpetual cashflows, assume that, for the sake of convenience, the house will last forever).
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started