Question
Scenario A) Suppose the risk-free rate is 3.17% and an analyst assumes a market risk premium of 6.96%. Firm A just paid a dividend of
Scenario A) Suppose the risk-free rate is 3.17% and an analyst assumes a market risk premium of 6.96%. Firm A just paid a dividend of $1.23 per share. The analyst estimates the of Firm A to be 1.44 and estimates the dividend growth rate to be 4.86% forever. Firm A has 257.00 million shares outstanding. Firm B just paid a dividend of $1.96 per share. The analyst estimates the of Firm B to be 0.83 and believes that dividends will grow at 2.73% forever. Firm B has 189.00 million shares outstanding. What is the value of Firm A? Answer format: Currency: Round to: 2 decimal places. Write out Full numerical answer to 2 decimal places.
Scenario B) Suppose the risk-free rate is 3.35% and an analyst assumes a market risk premium of 6.21%. Firm A just paid a dividend of $1.15 per share. The analyst estimates the of Firm A to be 1.38 and estimates the dividend growth rate to be 4.60% forever. Firm A has 271.00 million shares outstanding. Firm B just paid a dividend of $1.73 per share. The analyst estimates the of Firm B to be 0.80 and believes that dividends will grow at 2.63% forever. Firm B has 190.00 million shares outstanding. What is the value of Firm B? Answer format: Currency: Round to: 2 decimal places. Write out Full numerical answer to 2 decimal places. 2 Part question will rate thumbs up!
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