What is the present value of all future earnings

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You have just started a hot Internet company. Analysts predict that the firm will generate negative earnings in the first three years as follows: -200,000 at t = 1, -50,000 at t = 2 and -15,000 at t = 3. In the fourth year (t = 4), the earnings will be 100,000 and then earnings will grow at 14% per year for the next ten years (the last time the earnings grow at 14% is from t = 13 to t = 14). After that, as competition increases, earnings growth is expected to slow to 3% per year and continue at that level forever. The interest rate is 6%.

What is the present value of all future earnings?

Reference no: EM131564352

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