Harrison estimates that if it acquires Van Buren, the year end dividend will remain at $2 00 a share, but synergies will enable the dividend to grow at a constant rate of 7 a year (instead of the current 5 ) Harrison also plans to increase the debt ratio of what would be its Van Buren subsidiarythe...

Harrison estimates that if it acquires Van Buren, the year-end dividend will remain at $2.00 a share,

Question:

Harrison estimates that if it acquires Van Buren, the year-end will remain at $2.00 a share, but synergies will enable the to grow at a constant rate of 7% a year (instead of the current 5%). Harrison also plans to increase the debt ratio of what would be its Van Buren subsidiary—the effect of this would be to raise Van Buren’s beta to 1.1. What is the per-share value of Van Buren to Harrison Corporation? Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...