FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A firm's current profits are 13.5 million. All the products of the firm are at the maturity stage, and you expect that the profits to

A firm's current profits are 13.5 million. All the products of the firm are at the maturity stage, and you expect that the profits to increase indefinitely at a constant annual rate of 3%. If the firm's opportunity cost of fund is 8%, what is the present value of the firm before it pays out current profits as dividends?

Answer: the present value of the firm = $__________ million

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Macroeconomics

Macroeconomics

Authors: Stephen D. Williamson

6th Edition

013447211X, 134472119, 978-0134472119

More Books

Students also viewed these Economics questions

Question

★★★★★
Briefly discuss the International Accounting Standards Board (IASB). What is its mission? What is the composition of its membership and how long do members serve? Where is the IASB located?

Answered: 1 week ago

Question

★★★★★
20. I know where the nearest emergency exits are to my desk/workstation.

Answered: 1 week ago

Question

★★★★★
Assuming that the error term ???? has mean 0 in the regression model ???? = ????0 + ????1????1 + ????2????2 + ????3????3 + ???? (a) what is the mean of ???? when ????1 = 5,????2 = 3, and ????3 = 10?...

Answered: 1 week ago

Question

★★★★★
George Bailey Corporation experienced a fire on December 31, 2013, in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the...

Answered: 1 week ago

Question

★★★★★
Angelica Reardon received a 4-year non-subsidized student loan of $15,000 at an annual interest rate of 6.3%. What are Angelica's monthly loan payments for this loan after she graduates in 4 years?...

Answered: 1 week ago

Question

★★★★★
Question 3 (20 marks) A 9-month short position of a forward contract on a stock is entered into today, when the stock price is $60. The stock has expected dividends of $ 1.0 in 2 months, $2.0 in 5...

Answered: 1 week ago

Question

★★★★★
In the same way that classical economic theory models false assumptions about rational man, the CSR and sustainability debate, for the most part, models equally false assumptions about ______ man....

Answered: 1 week ago

Question

★★★★★
Jeffrey was 54 years old when he was hired as a disc jockey by Luke. Two years later, as Luke's business was failing, Jeffrey was laid off by Luke. Jeffrey learns that a few weeks after he left, he...

Answered: 1 week ago

Question

★★★★★
The brief 3-minute read introduces us to the Korean understanding of "Maum" (Mind). The reading is offered to stimulate thoughts and discussion on how culture impacts the creation of culture-specific...

Answered: 1 week ago

Question

★★★★★
Case Study Jean Davis is a 19-year-old woman who is experiencing difficulties in college. She moved out of the dorm because she thought other students were out to ruin her life. Her former roommate...

Answered: 1 week ago

Question

★★★★★
1. Main Entry: Within the body of post, clearly identify each segment of the required response in order to facilitate discussion development. a. Early impressions: Another UMGC Psychology student...

Answered: 1 week ago

Question

★★★★★
NEED ANSWER ASAP PLEASE The shape of a data set suggests a model of the form f(x) = A . ek.x. (a) (1.5 pts) Identify what each letter of the model represents: . The independent variable is...

Answered: 1 week ago

Question

★★★★★
15. Ask yourself the following questions: What do you want to remember from your everyday experiences? These are the experiences that fill most of your life. They may take 9099% of your time. What do...

Answered: 1 week ago

Question

★★★★★
What reward will you give yourself when you achieve this?

Answered: 1 week ago

Question

★★★★★
11. Now consider the different goals you have for your life in the future. See these goals in relation to your core values and your roles. How do goals affect your roles and your values? Development...

Answered: 1 week ago

Previous Question Next Question