Question $1$ or $1$

Af the Leginning of year $1,$ FINC$434$ raises $60$ million of equity and uses the proceeds to buy a fixed asset.

$10$ points

ismatiral value of zero$).$

Thet firm pays no taxes. Assuming straight$-$line depreciation to zero $($of $20$ million per year$),$ the firm's profits thus equal $20$ million in year $1,30$ million in year $2,$ and $40$ million in year $3.$

Trie cost of equity capital for this firm is $10$ percent.

Calculate the value of equity using

a$.$ Discounted Dividend Valuation Model

b$.$ Discounted Cashflow Model

c$.$ Discounted Abnormal Profit Model

d$.$ Discounted Abnormal Profit Growth Model

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