Suppose the interest rate is 6 percent, the expected growth rate of your firm is 3 percent, and the firm is expected to continue forever. If current profits are $1,200, what is the value of the firm? a. 41,200 b. 40,000 c. 36,500 d. 42,400

Foundations of Business (MindTap Course List)
6th Edition
ISBN:9781337386920
Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Chapter16: Mastering Financial Management
Section: Chapter Questions
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Suppose the interest rate is 6 percent, the
expected growth rate of your firm is 3
percent, and the firm is expected to
continue forever. If current profits are
$1,200, what is the value of the firm?
a. 41,200
b. 40,000
c. 36,500
d. 42,400
Transcribed Image Text:Suppose the interest rate is 6 percent, the expected growth rate of your firm is 3 percent, and the firm is expected to continue forever. If current profits are $1,200, what is the value of the firm? a. 41,200 b. 40,000 c. 36,500 d. 42,400
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