Examine each of the given profit growth scenarios

Assignment Help Microeconomics

Reference no: EM132130596

Question: The head of the accounting department at a major software manufacturer has asked you to put together a pro forma statement of the company's value under several possible growth scenarios and the assumption that the company's many divisions will remain a single entity forever. The manager is concerned that, despite the fact that the firm's competitors are comparatively small, collectively their annual revenue growth has exceeded 50 percent over each ofthe last five years. She has requested that the value projections be based on the firm's current profits of $4.3 billion (which have yet to be paid out to stockholders) and the average interest rate over the past 20 years (8 percent) in each of the following profit growth scenarios:

a. Profits grow at an annual rate of 11 percent. (This one is tricky.)

Choose one of these: --> (1- The firm will have to shut down at this growth rate. 2- the firm's value is zero. 3- The firm's value is infinite. 4- This growth rate is not possible.)

Round your responses to 2 decimal places.

b. Profits grow at an annual rate of 2 percent. _____ billion

c. Profits grow at an annual rate of 0 percent. _____ billion

d. Profits decline at an annual rate of4 percent. ____ billion

Reference no: EM132130596

Questions Cloud

What are initial equilibrium wage rate and employment level : In the graph below, assume that the market demand curve for labor is initially D1. The market supply curve for labor is indicated with figure "S".

What is the effect of association with criminals in jail : What is the effect of association with criminals in jail and prison? Do peer associations among juveniles assist in the development into criminal lifestyles?

Find minimal dfa : Find minimal dfa's for the following languages. In each case prove that the result is minimal.

Examine ucr statistics related to property crimes : Rates of property crime have risen and fallen over time. Examine UCR statistics related to property crimes. How have crime rates changed over time?

Examine each of the given profit growth scenarios : The head of the accounting department at a major software manufacturer has asked you to put together a pro forma statement of the company's value under several.

Rearranges an integer array : Need help with a C program array_rearrange.c that rearranges an integer array. The array will be split into two sets of integers one by one.

Positive numbers in the array a and store : The extract function finds the positive numbers in the array a and store in array positive. The third parameter is array of positive numbers

Discuss some of the differences in legal definitions : The one unique characteristic with juvenile delinquency is that the legal definition will vary from one state to another.

Assignment on information systems audit and controls : Elaborate on the different types of control that are applied in a hospital (Preventive, detective and corrective control).

User Account

All Pages