Question
Suppose the risk-free rate is 2.40% and an analyst assumes a market risk premium of 6.68%. Firm A just paid a dividend of $1.12 per
Suppose the risk-free rate is 2.40% and an analyst assumes a market risk premium of 6.68%. Firm A just paid a dividend of $1.12 per share. The analyst estimates the of Firm A to be 1.35 and estimates the dividend growth rate to be 4.91% forever. Firm A has 264.00 million shares outstanding. Firm B just paid a dividend of $1.53 per share. The analyst estimates the of Firm B to be 0.71 and believes that dividends will grow at 2.91% forever. Firm B has 188.00 million shares outstanding. What is the value of Firm B? (ANSWER SHOULD BE IN THE MILLIONS or BILLIONS.)
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