Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose the risk-free rate is 1.09% and an analyst assumes a market risk premium of 6.59%. Firm A just paid a dividend of $1.30 per

Suppose the risk-free rate is 1.09% and an analyst assumes a market risk premium of 6.59%. Firm A just paid a dividend of $1.30 per share. The analyst estimates the of Firm A to be 1.40 and estimates the dividend growth rate to be 4.50% forever. Firm A has 256.00 million shares outstanding. Firm B just paid a dividend of $1.85 per share. The analyst estimates the of Firm B to be 0.85 and believes that dividends will grow at 2.18% forever. Firm B has 198.00 million shares outstanding. What is the value of Firm B?

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

Banking With Integrity The Winners Of The Financial Crisis

Authors: Dr Heiko Spitzeck , Dr Michael Pirson, Dierksme , Dr. Heiko Spitzeck , Prof. Claus Dierksmeier, Dr. Michael Pirson

1st Edition

0230289959,0230346499

More Books

Students also viewed these Finance questions