Titanic Ltd. is in the lucrative field of underwater cruise liners. Over the next three years, Titanic Ltd. is expected to earn economic profit of $600,000 in the first year, $1,800,000 in the second year, and $700,000 in the third year than it will sink. This controversial new field is highly volatile with a risk premium of 22%. The latest discount rate published by the Central Bank is 6%. How much would you pay for this firm?
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Titanic Ltd. is in the lucrative field of underwater cruise liners. Over the next three years, Titanic Ltd. is expected to earn economic profit of $600,000 in the first year, $1,800,000 in the second year, and $700,000 in the third year than it will sink. This controversial new field is highly volatile with a risk premium of 22%. The latest discount rate published by the Central Bank is 6%. How much would you pay for this firm?
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