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Suppose the Interest Rate Is 5 Percent,the Expected Growth Rate

Question 102

Multiple Choice

Suppose the interest rate is 5 percent,the expected growth rate of the firm is 2 percent,and the firm is expected to continue forever.If current profits are $1,000,what is the value of the firm?


A) $31,000
B) $30,000
C) $26,500
D) $35,000

Correct Answer:

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