Question
Please Answer ASAP! Thank you! You founded a startup with an ROI of 100%. That is, each dollar you invest in the firm creates a
Please Answer ASAP! Thank you!
You founded a startup with an ROI of 100%. That is, each dollar you invest in the firm creates a permanent increase of one dollar in earnings for all time. Unfortunately, this ROI will be gone after two years (this means you can invest at ROI=100% at the end of years 1 and 2). After that, ROI will be 7%. You plan on reinvesting all earnings as long as its profitable, your return on equity is 10%, and your projected earnings for year 1 will be $10 million. What are the earnings for your startup at the end of year 3?
a. 20 million
b. 19 million
c. 30 million
d.40 million
e. 31 million
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