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will upvote for work shown You are the CEO of a firm manufacturing cell phone cases. You just announced that this year's (year 0 's)
will upvote for work shown You are the CEO of a firm manufacturing cell phone cases. You just announced that this year's (year 0 's) earnings are $1 million. Analysts predict your earnings will grow at 10% each year for the next two years and then earnings growth will slow to 3% per year and will continue growing at 3% in perpetuity. Assuming an opportunity cost of capital of 7%, what is the present value of your future (not counting this year) projected earnings? b) Suppose in a year from now you buy an electric car which allows you to save in gasoline costs (net of electricity costs) $1,000 per year. You start seeing fuel savings after the first year of using the car. Unfortunately, as the car gets older the electricity expenditures increase and, as such, your savings will decline by 3% per year. The discount rate is 13%. What is the PV of your savings? Assume both that you live forever and you own this car forever
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