Problem 1: What is the approximate value of a company that earns $5 this year if you wish to earn a 10% return and the companys earnings are expected to grow at 5%?
a. $50
b. $75
c. $100
d. $150
Problem 2: What is the approx value of a company that earns $5.00 this yar if you wish to earn a 10% return and the comapny's earnings are expected to decline by 3% per year?
a. $0
b. $38.50
c. $50
d. $61.33