Question
DTVT&T is about to merge with Wine Turner Networks and Studio if allowed by the Justice Department. DTVT&Ts current dividend is $2, the risk-free rate
DTVT&T is about to merge with Wine Turner Networks and Studio if allowed by the Justice Department. DTVT&Ts current dividend is $2, the risk-free rate is 2% and the market risk premium is 7.5%. DTVT&Ts common stock has an expected annual constant growth rate in dividends of 3% and a beta of 0.6 without the merger. If the merger is allowed, DTVT&Ts constant dividend growth rate would increase to 4% annually and the merged companys beta is expected to be 0.7. What would be the dollar change in value of DTVT&Ts common stock in dollars if the merger is allowed?
Group of answer choices
+5.14
+4.40
+22.86
+12.73
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