What is the present value of all future earnings

Assignment Help Finance Basics
Reference no: EM133122659

You are running a hot biotech company. Analysts predict that its earnings will grow at 30% per year for the next five years. After that, as competition increases, earnings growth is expected to slow to 2% per year and continue at that level forever. Your company has just announced earnings of $1,000,000. What is the present value of all future earnings if the interest rate is 8%? (Assume all cash flows occur at the end of the year.)

Note: please post the solution with complete explanation in WORD format. NO EXCEL please.

Reference no: EM133122659

Questions Cloud

What is the expected dollar pro?t from speculations : (a) What actions do you need to take to speculate in the forward market? What is the expected dollar pro?t from Speculations?
International finance : Explain the principle and features of comparative advantage. How does it relate to international trade?
Explain the type of bankruptcy filed : Explain the type of bankruptcy filed, the reason filed, the result of the case, and the final outcome of the team (still same ownership, sold, etc.).
Compute both direct labour cost and direct materials cost : Compute both direct labour cost and direct materials cost assigned to (a) units completed and transferred out, and (b) ending goods in process inventory
What is the present value of all future earnings : What is the present value of all future earnings if the interest rate is 8%? (Assume all cash flows occur at the end of the year.)
State requires to incorporate business : can you tell me specifically what your state requires to incorporate a business in that state? Provide a link to the state information.
Estimate the beta for x and y : You are a portfolio manager at Collins Asset Management. Your research department has developed the information shown in the following table.
Evaluate the impact that covid-19 had on university life : Investigate how levels of student satisfaction differed amongst university students during the academic year of 2020/2021
What is the required return for stock a : Stock A has just paid a dividend of $2.35 per share. Dividends are expected to grow to constant rate of 3% per year forever. What is required return for Stock A

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd