Discuss the role of net income in firm valuation

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Reference no: EM131982576

1 .Milton is trying to convince you to invest in his restaurant deal and make ten annual payments of $500, with the first payment due today. If the market rate of interest is 6%, how much will this investment be worth at the end of ten years?

2. Discuss the role of net income in firm valuation under the ideal conditions VS. its role under the presence of uncertainty. Does the net income have information content in these two conditions? What basic assumption needs to be changed to make the net income to have information content?

Reference no: EM131982576

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