Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / A firm's current annual profit is $245,000
A firm's current annual profit is $245,000. If the profit is expected to grow at an annual rate of 4.5% and the discount rate is 6%, what is the value of the firm? Round your final answer to the nearest dollar.
Group of answer choices
$17,313,333
$16,996,668
None of the answers listed is correct.
$18,241,267
$17,068,333
Value of the firm= $17,313,333
Explanation
PV= Firm's current profit* ((1+ discount rate)/ discount rate- Annual rate)
= =245000*(1+6%)/(6%-4.5%)
= $ 17,313,333
