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Over the next three years, a firm is expected to earn economic profits of $120,000 in the first year, $140,000 in the second year, and
Over the next three years, a firm is expected to earn economic profits of $120,000 in the first year, $140,000 in the second year, and $100,000 in the third year. After the end of the third year, the firm will go out of business. If the risk-adjusted discount rate is 10 percent for each of the next three years, what is the value of the firm? What price can the firm be sold for today?
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