Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose the risk - free rate is 3 . 7 8 % and an analyst assumes a market risk premium of 6 . 4 6

Suppose the risk-free rate is 3.78% and an analyst assumes a market risk premium of 6.46%. Firm A just paid a dividend
of $1.43 per share. The analyst estimates the of Firm A to be 1.36 and estimates the dividend growth rate to be 4.62%
forever. Firm A has 257.00 million shares outstanding. Firm B just paid a dividend of $1.66 per share. The analyst
estimates the of Firm B to be 0.89 and believes that dividends will grow at 2.20% forever. Firm B has 181.00 million
shares outstanding. What is the value of Firm B?
image text in transcribed

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

Finance And Sustainable Development

Authors: Magdalena Ziolo

1st Edition

0367819767, 978-0367819767

More Books

Students also viewed these Finance questions

Question

What are the basic elements of production cost?

Answered: 1 week ago