Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose the risk - free rate is 3 . 3 3 % and an analyst assumes a market risk premium of 5 . 4 3

Suppose the risk-free rate is 3.33% and an analyst assumes a market risk premium of 5.43%. Firm A just paid a dividend of $1.31 per share. The analyst estimates the \beta of Firm A to be 1.45 and estimates the dividend growth rate to be 4.84% forever. Firm A has 271.00 million shares outstanding. Firm B just paid a dividend of $1.96 per share. The analyst estimates the \beta of Firm B to be 0.82 and believes that dividends will grow at 2.66% forever. Firm B has 185.00 million shares outstanding. What is the value of Firm A?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Portfolio Performance Measurement And Benchmarking

Authors: Jon Christopherson, David Carino, Wayne Ferson

1st Edition

0071496653, 978-0071496650

More Books

Students also viewed these Finance questions