Question: You are running a hot Internet company. Analysts predict that its earnings will grow at $40\%$per year for the next $5$years$.$ After that, as competition increases, earnings growth is expected to slow to $6\%$per year and continue at that level forever. Your company has just announced earnings of $$4$million$.$ What is the present value of all future earnings if

You are running a hot Internet company. Analysts predict that its earnings will grow at

$4$

$0$

$\%$

$$per year for the next

$5$

$$years$.$ After that, as competition increases, earnings growth is expected to slow to

$6$

$\%$

$$per year and continue at that level forever. Your company has just announced earnings of $

$4$

$$million$.$ What is the present value of all future earnings if the interest rate is

$9$

$\%$

$?$

$($

Assume all cash flows occur at the end of the year.