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Our company uses a growing perpetuity model to analyze its corporate value. The value is currently modeled based on: Annual revenues $28m Annual costs are
Our company uses a growing perpetuity model to analyze its corporate value.
The value is currently modeled based on:
Annual revenues $28m
Annual costs are $20m
Net inflow in the first year was $8m
Cost of capital 12%
Growth rate 2%
If annual costs were to decrease, with no other changes, then the corporate value would normally be expected to:
a) Increase.
b) Stay the same.
c) Decrease.
d) There's not enough information to answer.
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