Homework: Homework 8 Save Score: 0 of 1 pt 8 of 8 (5 complete) HW Score: 37.5%, 3 of 8 p 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 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 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 $3.66 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 retum on Craft's stock is (% (Round to the nearest whole percentage) Enter your answer in the answer box and then click Check Answer. 5 parts remaining Clear All Check Answer This course Finc3312020F-Syn) is based on Zutter/Smart Principles of Managerial Finance Brief, de 16 stv Aa A w P7-24 (similar to) Main Menu Integrative Risk and Valuation Hamlin Steel Company wishes to determine the value of Craft Foundry, a firm that it is considering acq Assignmen wishes to determine the applicable discount rate to use as an input to the constant-growth valuation model. Craft's stock is not publicly trac required returns of firms similar to Craft that are publicly traded, Hamlin believes that an appropriate risk premium on Craft stock is about 8 Do Homew currently 5%. Craft's dividend per share for each of the past 6 years is shown in the following table: each sh Data Table a. Given that Craft is expected to pa Take a Quia the growth rate to the nearest whole b. Describe the effect on the resultin (1) A decrease in its dividend gro (2) A decrease in its risk premiur a. The required return on Craft's stog ad sel gle og AGE (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Year Dividend per Share 2019 $3.51 2018 $3.37 2017 $3.24 2016 $3.12 2015 $3.00 2014 $2.88 LO orad Hecti heno This a Print Done in bicic