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Question 5 You are the CEO of a very popular social networking firm. You just announced that this years earnings are $1 billion. Analysts predict
Question 5
You are the CEO of a very popular social networking firm. You just announced that this years earnings are $1 billion. Analysts predict your earnings will grow at 20% each year for the next three years and then earnings growth will slow to 2% per year and will continue growing at 2% in perpetuity. Assuming r=8%, what is the present value of your future (not counting this year) projected earnings?
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