Assume an all equity firm has been growing at a 15 percent annual rate and is expected to continue to do so for 3 more years. At that time, growth is expected to slow to a constant 4 percent rate. The firm maintains a 30 percent payout ratio, and this year's retained earnings net of dividends were $1.4 million. The firm's beta is 1.25, the risk-free rate is 8 percent, and the market risk premium is 4 percent. If the market is in equilibrium, what is the market value of the firm's common equity (1 million shares outstanding)?

	a.	$10.56 million
	b.	$12.96 million
	c.	$9.18 million
	d.	$6.41 million
	e.	$7.32 million

is expected toslowvalue a the firm's common equity percent Assume an all equity firm has been growing at a 15 percent annual rate and is expected to continue to do so for 3 more years. At that time, growth is expected to slow to a constant 4 percent rate. The firm maintains a 30 percent payout ratio, and this year's retained earnings net of dividends were $1.4 million. The firm's beta is 1.25, the risk-tree rate is 8 percent, and the market risk premium is 4 percent. I the market is in equilibrium, what is the market value of the firm's common equity (1 million shares outstanding)? o a. $10.56 million o b. $12.96 million o c. $9.18 million ingpndth equilibrium, what is the mark d. $6.41 million o e, $7.32 million