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P7-24 (similar to) Question Help Integrative -Risk and Valuation Hamlin Steel Company wishes to determine the value of Craft Foundry, a firm that it is considering acquiring for cash. Hamlin wishes to determine the applicable disoount rate to use as an input to the oonstant-growth valuation model. Crafts stock is not publicly traded. After studying the required returns of firms similar to Craft that are publicly traded Hamlin believes that an appropriate risk premium on Craft stock is about 8 The risk-free rate is currently 5%. Craft's dividend per share for each of the past 6 years is shown in the following table a. Given that Craft is expected to pay a dividend of $3.88 next year, determine the maximum cash price that Hamlin should pay for each share of Craft. (Hint: Round the growth rate to the nearest whole percent.) b. Describe the effect on the resulting value of Craft from (1) A decrease in its dividend growth rate of 2% from that exhibited over the 2014-2019 period. (2) A decrease in its risk premium to 7%. a The required return on Craft's stock is % (Round to the nearest whole percentage ) Enter your answer in the answer box and then click Check Answer parts remaining Clear All Check Answer P7-24 (similar to) Question Help Integrative Risk and Valuation Hamlin Stool Company wishos to determine the value of Craft Foundry, a firm that it is considoring acquiring for cash. Hamlin wishes to determine the applicable discount rate to use as an input to the constant-growth valuation model. Craft's stock is not publicly traded. After studying the required returns of firms similar to Cr currently 5%. Craft's dividend per a Data Table 18%. The risk-free rate is a. Given that Craft is expected to pay growth rate to the nearest whole b. Describe the effect on the r share of Craft. (Hint: Round the (1) A dacrease in its dividend (2) A decrease in its risk premium (Click on the icon located on the top-right comer of the data table below in order to copy its contents into a spreadsheet) Year Dividend per Share 2019 2018 2017 2016 2015 2014 a. The required return on Crafts $3.63 $3.39 $3.17 $2.96 $2.77 $2.59 Enter your answer in the answer bo Print Done parts Check