Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose the risk-free rate is 2.10% and an analyst assumes a market risk premium of 5.90%. Firm A just paid a dividend of $1.26

image text in transcribed

Suppose the risk-free rate is 2.10% and an analyst assumes a market risk premium of 5.90%. Firm A just paid a dividend of $1.26 per share. The analyst estimates the of Firm A to be 1.23 and estimates the dividend growth rate to be 4.57% forever. Firm A has 292.00 million shares outstanding. Firm B just paid a dividend of $1.53 per share. The analyst estimates the of Firm B to be 0.87 and believes that dividends will grow at 2.06% forever. Firm B has 197.00 million shares outstanding. What is the value of Firm B? Submit Answer format: Currency: Round to: 2 decimal places. Show Hint

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

Personal Financial Planning

Authors: Lawrence J. Gitman, Michael D. Joehnk, Randy Billingsley

13th edition

1111971633, 978-1111971632

More Books

Students also viewed these Finance questions

Question

have a question on part B question 1 & 2...

Answered: 1 week ago

Question

Why is employment-at-will treated differently in various states?

Answered: 1 week ago

Question

=+a) Write the regression model.

Answered: 1 week ago

Question

=+b) Are the assumptions and conditions met?

Answered: 1 week ago