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# 4 Suppose the risk - free rate is 3 . 2 6 % and an analyst assumes a market risk premium of 7 .

#4
Suppose the risk-free rate is 3.26% and an analyst assumes a market risk premium of 7.17%. Firm A just paid a dividend of $1.01 per share. The analyst estimates the of Firm A to be 1.42 and estimates the dividend growth rate to be 4.93% forever. Firm A has 256.00 million shares outstanding. Firm B just paid a dividend of $1.77 per share. The analyst estimates the of Firm B to be 0.81 and believes that dividends will grow at 2.82% forever. Firm B has 196.00 million shares outstanding. What is the value of Firm A?
Answer format: Currency: Round to: 2 decimal places.
#5
Suppose the risk-free rate is 1.32% and an analyst assumes a market risk premium of 7.54%. Firm A just paid a dividend of $1.27 per share. The analyst estimates the of Firm A to be 1.45 and estimates the dividend growth rate to be 4.09% forever. Firm A has 297.00 million shares outstanding. Firm B just paid a dividend of $1.54 per share. The analyst estimates the of Firm B to be 0.90 and believes that dividends will grow at 2.50% forever. Firm B has 180.00 million shares outstanding. What is the value of Firm B?
Answer format: Currency: Round to: 2 decimal places.
Please use a financial calculator for each part.
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