Question

Google expects its ad revenue to increase by 3% per year, if last year they made $13811billion, what is the present value of its ad business assuming an MARR of 7%? (note: put the answer in billions such that 10,000,000,000 is just 10.0000, no units, use 4 decimals, tolerance .5%, assume the company does not go bankrupt ;))

Answer 1

The computation would be as below:

Present value = [13,811 × (1 + increasing rate)] / (1 + MARR) ^year

                        = [13,811 × (1 + 0.03)] / (1 + 0.07) ^1

                        = [13,811 × 1.03] / 1.07

                        = 14,225.33 / 1.07

                        = 13,294.7009

Answer: 13294.7009