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Hi what is the answer to the question? thanks Problem 7-14 Question Help v 0 What is the value of a firm with initial dividend
Hi what is the answer to the question?
thanks
Problem 7-14 Question Help v 0 What is the value of a firm with initial dividend Divy, growing for n years (i.e., until year n + 1) at rate g, and after that at rate g2 forever, when the equity cost of capital is r? (Hint: Find the present value of the n-year dividend stream which grows at gy per year and add the present value of the continuation value found at year n.) The correct formula is: (Select the best choice below.) O A n Div 1 1 +91 1 +91 DIV1 Po 1 - (19)) + r-91 1 + r r-92 B. 1 +91 n-1 Div 1 Po = r-91 Diva * (1+91) x (1+92) 1- + 1+r (r-92) *(1 + r)" O c. n + 1 Div1 1 +91 1 +91 Diva POS + r-91 1 + r r-92 OD. n + 1 Diva +91 Div1 Po (1:-))-(7 1 - + r-91 1 +r p-92Step by Step Solution
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