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Delta, Inc. Firm Valuation Analysis

Delta, Inc. is projected to grow at 3% annually, with current profits of $1,000 not yet paid as dividends. Using the formula for present value and a market interest rate of 6%, the value of the firm is calculated to be $35.33. This represents the present value of all current and future profits for the company.

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3 views1 page

Delta, Inc. Firm Valuation Analysis

Delta, Inc. is projected to grow at 3% annually, with current profits of $1,000 not yet paid as dividends. Using the formula for present value and a market interest rate of 6%, the value of the firm is calculated to be $35.33. This represents the present value of all current and future profits for the company.

Uploaded by

Shyme Frits
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

2. Delta, Inc. is expected to grow at an annual rate of 3 percent for the foreseeable future.

The
current profits of Delta are $1,000, and have not been paid as dividends. What is the value of
the firm (the present value of all current and future profits) assuming the market interest rate is
6%? 

1+i
PV firm = 𝜋0 ( )
i−g

1+0.06
= 1000 ( )
0.06−0.03

= $35.33

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