Firm will profit 400k at the end year 6. G= 11 % Discount rate = 18%, you...
Firm will profit 400k at the end year 6. G= 11 % Discount rate = 18%, you will attain half of firm. What amount willing to invest?
Homework Answers
value of firm today=(profit at the end of year 6/(r-g))/(1+r)^5
=(400/(18%-11%))/(1+18%)^5
=2497.77K OR 2497766.95
What amount willing to invest for 50% share=2497766.95/2=1248883.48 or 1248.88K
the above is answer..
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