Which method must use to valuate young companies
Which method must we use to valuate young companies along with high growth but uncertain futures? Two illustrations were Boston Chicken and Telepizza while they began.
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The great majority of analysts confess that this is very difficult to realize projections of flows of young companies along with uncertain futures. Although Fernández (2004) shows that we can predict a future year wherein the company would already be consolidated; which is, starting from which particular year the company must have a moderate growth.
The capitalization which year must be today’s capitalization revaluated at the needed return. If such capitalization looks reasonable, therefore today’s quotation is also reasonable. But if this looks exaggerated, so the company today is overvalued. A same method is to compute the flows essential to justify future capitalization and to weight its magnitude.
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ABC Corp is issuing a 10-year bond with a coupon rate of 7 %. The interest rate for similar bonds is at present 9 %. Supposing annual payments, what is the current value of the bond? (Round to the closest dollar.) (a) $872 (b) $1,066 (c) $990 (d) $945. Discover Q & A Leading Solution Library Avail More Than 1461220 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads No hassle, Instant Access Start Discovering 18,76,764 1938221 Asked 3,689 Active Tutors 1461220 Questions Answered Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!! Submit Assignment
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