Your companyhas earnings of $19.7 million and is projected to grow at a constant rate of 4 percent forever because of the benefits gained from
Your companyhas earnings of $19.7 million and is projected to grow at a constant rate of 4 percent forever because of the benefits gained from the learning curve. Currently, all earnings are paid out as dividends. The company plans to launch a new project two years from now that would be completely internally funded.The company has 9.2 million shares of stock outstanding.Estimate the value of the stock with adiscount rate of14%.NPVGO per share of the new project to be launched two years from now is estimated to be $5.9in Year 2.
A. 22.27
B. 16.37
C. 26.81
D. 15.9
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Authors: Mckinsey, Tim Koller, Marc Goedhart, David Wessel
5th edition
978-0470424650, 9780470889930, 470424656, 470889934, 978-047042470
