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Perpetual Ltd is considering an expansion. Consider the following information about the financial structure of the firm. Account payables $ 200,000 Short-term debt 200,000 Current
Perpetual Ltd is considering an expansion. Consider the following information about the financial structure of the firm.
Account payables | $ 200,000 |
Short-term debt | 200,000 |
Current liabilities | $ 400,000 |
Long-term debt | $ 1,500,000 |
Owners equity | 2,500,000 |
Total | $ 4,400,000 |
Assume that the company paid a dividend of $4.00 per share last year and the dividend is expected to grow at 5 per cent for the next 7 years, and after that the growth rate will be 6 per cent forever.
- Calculate the value of the share if the required rate of return is 14.5 per cent?
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