What is currently the value of the firm

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The owner of a firm calculates that next year’s profit will be $1,000. Each successive year profit will increase by 10% (i.e. year 2: $1100; year 3: $1210 and so on.) At the end of the 5th year the firm could be sold for $20,000. A) if the appropriate discount rate is 15%, what is currently the value of the firm? B) if the owner presently receives an offer of $15050 for the firm and accepts it, what does that imply about his discount rate?

Reference no: EM13146215

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