Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose the risk-free rate is 3.61% and an analyst assumes a market risk premium of 5.63%. Firm A just paid a dividend of $1.25 per

Suppose the risk-free rate is 3.61% and an analyst assumes a market risk premium of 5.63%. Firm A just paid a dividend of $1.25 per share. The analyst estimates the of Firm A to be 1.35 and estimates the dividend growth rate to be 4.72% forever. Firm A has 272.00 million shares outstanding. Firm B just paid a dividend of $1.59 per share. The analyst estimates the of Firm B to be 0.87 and believes that dividends will grow at 2.34% forever. Firm B has 195.00 million shares outstanding. What is the value of Firm A?

Suppose the risk-free rate is 3.44% and an analyst assumes a market risk premium of 6.64%. Firm A just paid a dividend of $1.19 per share. The analyst estimates the of Firm A to be 1.29 and estimates the dividend growth rate to be 4.99% forever. Firm A has 267.00 million shares outstanding. Firm B just paid a dividend of $1.59 per share. The analyst estimates the of Firm B to be 0.89 and believes that dividends will grow at 2.85% forever. Firm B has 192.00 million shares outstanding. What is the value of Firm B?

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

Recommended Textbook for

The Meaningful Money Handbook

Authors: Pete Matthew

1st Edition

0857196510, 978-0857196514

More Books

Students also viewed these Finance questions