3. The accounting department head of MOOG Controls Phils. has asked his financial

manager to provide a pro forma statement of the company's "value" under a variety of

prospective expansion scenarios, with the assumption that the company's many

divisions will always be a single entity. The company's manager is concerned because,

despite the fact that the company's competitors are few, their yearly sales growth has

topped 60% in each of the last five years. The accounting department head advised that

the valuation estimates be based on the company's profits of Php5.2 billion (which have

yet to be paid out to investors) and the average interest rate over the past 20 years (7

percent) in each of the following profit growth scenarios:

A. 5.5% annual growth rate of profits.

B. 2.8% annual growth rate of profits.

C. 0% annual growth rate of profits.

D. 10.25% annual growth rate of profits.