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A firm's current profits are $400,000. These profits are expected to grow indefinitely at a constant annual rate of 4 percent. If the firm's opportunity
A firm's current profits are $400,000. These profits are expected to grow indefinitely at a constant annual rate of 4 percent. If the firm's opportunity cost of funds is 6 percent, determine the value of the firm:
A. The instant before it pays out the current profits as dividends
$_____________Million
B. The instant it pays out current profits as dividends.
$_____________Million
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