Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose the risk - free rate is 3 . 5 6 % and an analyst assumes a market risk premium of 7 . 0 6

Suppose the risk-free rate is 3.56% and an analyst assumes a market risk premium of 7.06%. Firm A just paid a dividend of $1.49 per share. The analyst estimates the \beta of Firm A to be 1.46 and estimates the dividend growth rate to be 4.54% forever. Firm A has 291.00 million shares outstanding. Firm B just paid a dividend of $1.58 per share. The analyst estimates the \beta of Firm B to be 0.71 and believes that dividends will grow at 2.23% forever. Firm B has 196.00 million shares outstanding. What is the value of Firm B?
Submit
Answer format: Currency: Round to: 2 decimal places.

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

The Dark Side Of Valuation

Authors: Aswath Damodaran

1st Edition

013040652X, 9780130406521

More Books

Students also viewed these Finance questions

Question

Describe the major elements and issues with throwaway prototyping.

Answered: 1 week ago

Question

Differentiate tan(7x+9x-2.5)

Answered: 1 week ago

Question

Explain the sources of recruitment.

Answered: 1 week ago

Question

Differentiate sin(5x+2)

Answered: 1 week ago

Question

Compute the derivative f(x)=1/ax+bx

Answered: 1 week ago

Question

What is the cause of this situation?

Answered: 1 week ago

Question

What is the significance or importance of the situation?

Answered: 1 week ago