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Assume that you decide that the you were too safe when deciding on SBX's stock price. You change your discount rate to 5.5% and double
Assume that you decide that the you were too safe when deciding on SBX's stock price. You change your discount rate to 5.5% and double the cash flows of years 6-8. What is the value of a share of SBX given your new information? You get some more information on TRU. You learn that a new CEO is likely to deliver cash flows of $500,000,000 in years 11-13. You also decide that the economy will get stronger in year 5 so you change your discount rate to 4% for years 5-8. You decide the economy will be weak in year 9, so you use a discount rate of 1.5% for years 9-13. What is the value of a share of TRU given your new information? Assume that you decide that the you were too safe when deciding on SBX's stock price. You change your discount rate to 5.5% and double the cash flows of years 6-8. What is the value of a share of SBX given your new information? You get some more information on TRU. You learn that a new CEO is likely to deliver cash flows of $500,000,000 in years 11-13. You also decide that the economy will get stronger in year 5 so you change your discount rate to 4% for years 5-8. You decide the economy will be weak in year 9, so you use a discount rate of 1.5% for years 9-13. What is the value of a share of TRU given your new information
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