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Perpetuity Question
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I'm studying an investment question.
Company A's Price is 2 million pounds
Company B's Price is 3 million pounds
Company A's profitability is consistent with a perpetuity of 300,000 pounds per year.
Company B's profitability is consistent with a perpetuity of 435,000 pounds per year.
Maximum purchase cost is 4million pounds. Discount rate is 12 percent to both.
A) What company or companies, if any should be purchased with the npv rule
B) with IRR rule?
C) Which company should be purchased?
Company A's Price is 2 million pounds
Company B's Price is 3 million pounds
Company A's profitability is consistent with a perpetuity of 300,000 pounds per year.
Company B's profitability is consistent with a perpetuity of 435,000 pounds per year.
Maximum purchase cost is 4million pounds. Discount rate is 12 percent to both.
A) What company or companies, if any should be purchased with the npv rule
B) with IRR rule?
C) Which company should be purchased?
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