Chapter9: Capital Budgeting Techniques
Section: Chapter Questions
Problem 14PROB
Related questions
Question
horizon value question
the
a) Find the horizon value?
b) Suppose that when the program ends, there will be a clean-up cost of $1000 that must be subtracted to calculate the horizon value. What is the horizon value now?
Expert Solution
Step 1
Formula to calculate horizon value is:
HV = Cash flow(1+g)
d - g
Where g is the growth rate & d is the discount rate
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