Question: say that over the next three years a company expects...
Say that over the next three years a company expects profits at the end of the years to be 100, 110 and 120, respectively. If the rate at which future dollars are discounted is 6%, what is the net present value of this profit stream?
Consider a change in expectations in the example above in that yearly profits are now expected to be even higher than mentioned. What would you expect to be the impact on shareholder wealth from this change?