Question
Your firm just finished the year, in which it had cash earnings of $400 (thousand). You forecast your firm to have a quick growth phase
Your firm just finished the year, in which it had cash earnings of $400 (thousand). You forecast your firm to have a quick growth phase from year 0 to year 5, in which it grows at a rate of 40% per annum. Your firms growth then slows down to 20% per annum, from year 5 to year 10. Finally, beginning in year 11, you expect the firm to settle into its long-term growth rate of 2% per annum. You also expect your cost of capital to be 15% over the first 5 years, then 10% over the next 5 years, and 8% thereafter. What do you think your firm is worth today?
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