a. A firm is paying $8 per year dividend (the next dividend is in one year). There

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a. A firm is paying $8 per year dividend (the next dividend is in one year). There is zero growth. The tax rate on ordinary income is .396. The investor's after tax opportunity cost on comparable risk investments is .12.

What is the stock price?

b. What is the stock price if the horizon being considered is five years and the stock price at time 5 is the same as at time zero?

c. Assume a 20 year horizon. At the end of 20 years the stock value is expected to be zero. The capital gains tax rate is

.20.

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Private Equity Transforming Public Stock To Create Value

ISBN: 9780471392927

1st Edition

Authors: Harold Bierman

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Question Posted: Jun 07, 2024 01:12 AM

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a. A firm is paying $8 per year dividend (the next dividend is in one year). There

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Private Equity Transforming Public Stock To Create Value

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