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4. Suppose the risk-free rate is 3.87% and an analyst assumes a market risk premium of 7.29%. Firm A just paid a dividend of $1.13
4. Suppose the risk-free rate is 3.87% and an analyst assumes a market risk premium of 7.29%. Firm A just paid a dividend of $1.13 per share. The analyst estimates the of Firm A to be 1.43 and estimates the dividend growth rate to be 4.04% forever. Firm A has 298 million shares outstanding. Firm B just paid a dividend of $1.96 per share. The analyst estimates the of Firm B to be .81 and believes that dividends will grow at 2.75% forever. Firm B has 183 million shares outstanding. What is the value of Firm A?
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