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Annual Compounding

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Annual Compounding. The following table shows annual sales data for Stuff Happens, Inc., over the ten-year 1998-2008 period:
Annual Compounding. The following table shows annual sales data for Stuff Happens, Inc., over the ten-year 1998-2008 period:     A. Calculate the 1998-2008 growth rate in sales using the constant rate of change model with annual compounding. B. Forecast sales for the years 2011 and 2013.
A. Calculate the 1998-2008 growth rate in sales using the constant rate of change model with annual compounding.
B. Forecast sales for the years 2011 and 2013.


Definitions:

PEG Ratio

A stock valuation metric that measures the price-to-earnings ratio (P/E) of a stock divided by its earnings growth rate.

Growth Rate

The rate at which an economic variable, such as the Gross Domestic Product (GDP), a company's profits, or an investment's value, increases over a specified period of time.

Market Capitalization Rate

The expected return on an investment in the market, often used in the valuation of stocks and to determine a company's cost of equity.

PVGO

Present Value of Growth Opportunities; a model that estimates the value of a firm's shares excluding its current earnings, focusing on future growth.

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