It is not possible to value a firm that has a supernormal(variable) growth rate for...

It is not possible to value a firm that has a supernormal (variable) growth rate for the first few years of its life. True False

Expert Solution

FALSE

It is possible to value a firm that has a supernormal (variable) growth rate for the first few years of its life. If we know the growth rate, the discount rate, and the cash flows we can value any firm regardless of the variablity in the growth rate.

The value of the firm will just the present value of its future cash flows.

jeff jeffy answered 2 years ago

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