Question
A factory will generate an expected cash flow of $650,000 one year from now. After that, yearly expected cash flows from the factory will grow
A factory will generate an expected cash flow of $650,000 one year from now. After that, yearly expected cash flows from the factory will grow by 4% per year in perpetuity. The OCC for these cash flows is 11%.
a.Calculate the current market value of the factory.
b.Calculate the expected market value of the factory six years from now.
c.Calculate the growth rate of the expected market value.
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International Finance Theory And Policy
Authors: Paul R. Krugman, Maurice Obstfeld, Marc Melitz
11th Global Edition
1292238739, 978-1292238739
