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1. Suppose the interest rate is 10 percent and the firm is expected to grow at a rate of 5 percent for the foreseeable future.
1. Suppose the interest rate is 10 percent and the firm is expected to grow at a rate of 5 percent for the foreseeable future. The firm's current profits are $100 million. (a) What is the value of the firm (the present value of its current and future earnings)? (b) What is the value of the firm immediately after it pays a dividend equal to its current profits
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Principles of Economics
Authors: Gregory Mankiw
7th edition
128516587X, 978-1285165875
