Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You are running a start up company. Analysts predict that its cashflow will grow at 30% per year for the next five years starting from
You are running a start up company. Analysts predict that its cashflow will grow at 30% per year for the next five years starting from $1,000,000 that was just realized. After 5 years, cashflow growth is expected to slow to 2% per year and continue at that level. What is the present value of the firm's cash flow? Use perpetuity formula.
Starting growth rate Years of high growth Later growth rate Discount rate 30.00% 5 2.00% 8.00%Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started