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1. Suppose the interest rate is 10 present and the firm is expected to grow at a rate of 5 percent for the foreseeable future.
1. Suppose the interest rate is 10 present and the firm is expected to grow at a rate of 5 percent for the foreseeable future. The firms current profits are $100.
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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Focus On Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert Hughes, Melissa Hart
6th Edition
125991965X, 978-1259919657
