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What is the present value of the company today

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You run a grocery store where consultants predict that earnings will grow 50% per year for the next three years. Your company has just announced earnings of $2 million for the current year.

Problem 1: After the 3rd year, earnings growth is expected to slow to 4% per year and continue at that level forever. The interest rate remains the same at 8%. What is the value of the company in year 3?

Problem 2: What is the present value of the company today?

Reference no: EM132836763

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