Analysts need to forecast the future growth pattern for a company. If the incorrect growth pattern is used when valuing the company, the accuracy of the valuation will be very poor.

1. Explain in your own words, why the growth patterns for Samsung and Facebook are different. In your answer you must describe what their growth patterns will look like.

2. List and explain two of Porters Five Forces that could explain why Facebook has such high

   profit margins.

3. Explain in your own words why when inflation is increasing, a companys growth rate in the

   stable growth phase can be zero.

4. The impact of an increasing stable growth rate on the value of a company will be influenced

   by a companys return on capital and cost of capital. Describe what a companys return on capital and cost of capital measure and when an increasing stable growth rate will decrease the value of a company.

5. Explain in your own words how common size analysis can be used to identify whether the increasing growth in a companys net income is due to its net sales or cost of goods sold.