Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose the risk-free rate is 2.84% and an analyst assumes a market risk premium of 7.40%. Firm A just paid a dividend of $1.19 per

image text in transcribed
Suppose the risk-free rate is 2.84% and an analyst assumes a market risk premium of 7.40%. Firm A just paid a dividend of $1.19 per share. The analyst estimates the B of Firm A to be 1.36 and estimates the dividend growth rate to be 4.14% forever. Firm A has 298.00 million shares outstanding, Firm B just paid a dividend of $1.72 per share. The analyst estimates the B of Firm B to be 0.77 and believes that dividends will grow at 2.19% forever. Firm B has 184.00 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

Students also viewed these Finance questions