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Please show work and Formulas used Chapter 1 1. Assume the free cash flows of an investment, with a 13% discount rate, are $100 in
Please show work and Formulas used
Chapter 1 1. Assume the free cash flows of an investment, with a 13% discount rate, are $100 in Year 1. $120 in Year 2, $150 in Year 3, and will grow at 3% in perpetuity after Year 3 2. From Bloomberg, you got the following information. The annual dividends of Stock B are forecasted by analysts to be $2.00, $2.10, $2.25, $3.00 and $3.00. In addition, the stock price is expected to be $60.00 in five years. If the required return on equity using CAPM is 8 % what is the value of this stock? 3. Firm A just paid $2.5 per share, and the current stock price on the market is $36.00. The beta of this stock is 1.2, and the risk-free rate is 2%, and the market return is 10%. You expect that the long term growth rate of this dividend would be 4%. What is the value of this stockStep by Step Solution
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