Units Sold (in thousands) Year 1 Year 2 Year 3 Average Selling Price Year 1 Year 2 Year 3 Profitability by Advertising Intensity Profits in millions) Year 1 Year 2 Year 3 Advertising Intensity High $20 $ 80 $300 Moderate 40 80 135 75 110 118 10 5 60 12.5 120 25 7.2 $35,000 35,800 35,900 $36,500 $38,000 36,100 36,300 36,250 36,000 Low 4 6 17. The head of the accounting department at a major software manufacturer has asked you to put together a pro forma statement of the company's value under several possible growth scenarios and the assumption that the company's many divisions will remain a single entity forever. The manager is concerned that, despite the fact that the firm's competitors are comparatively small, collectively their annual revenue growth has exceeded 50 per- cent over each of the last five years. She has requested that the value projections be based on the firm's current profits of $3.2 billion (which have yet to be paid out to stockholders), and the average interest rate over the past 20 years (6 percent) in each of the following profit growth scenarios: (LOS, LO7) a. Profits grow at an annual rate of 9 percent. (This one is tricky.) b. Profits grow at an annual rate of 2 percent. c. Profits grow at an annual rate of 0 percent. d. Profits decline at an annual rate of 4 percent. 11 u 500 in