Two firms using the appropriate methodology

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Reference no: EM131312476

Calculate the value of the following two firms using the appropriate methodology.

a. Earnings for the firm with a cash flow for the next 5 years are $500, $700, $1000, $1200, and $500. The firm then dissolves (that is its cash flow after 5 years is zero). THe discount rate for the firm is 12%.

b. The firm experiences the same first years as in (a.) It then experiences steady state growth at 5% per year.

Reference no: EM131312476

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