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please show work 16. ABC is expected to generate a free cash flow of $4 million next year and the free cash flows are expected
please show work 16. ABC is expected to generate a free cash flow of $4 million next year and the free cash flows are expected to grow at 4% per year forever. ABC had $5 million in cash, $20 million in debt, and 10 million shares outstanding at the time of an acquisition. ABC is expected to pay a constant dividend (forever) to shareholders starting in year 1. Assuming that ABC was acquired at the fair price, what is the expected dividend amount ( $/ share) in year 1 ? The weighted average cost of capital is 8% and the cost of equity is 12%. a) $0.68 b) $1.02 c) $10.20 d) $29.17 e) None of the above
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