Bruin inc will have earnings of 15 million next year and is, Ask an Expert

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Bruin Inc. will have earnings of $15 million next year and is projected to grow at a constant rate of 6 percent forever. All earnings are paid out as dividends to shareholders.

The company plans to launch a new project two years from now that will cost $10 million. The project will increase the firm's annual earnings by a constant $8.3 million every year forever starting one year later (i.e. 3 years from now).

What is the market value of the company stock? The discount rate is 16.3 percent.

a. $176 million

b. $30 million

c. $122 million

d. $187 million

e. $65 million

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92838486

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