Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose the risk-free rate is 3.96% and an analyst assumes a market risk premium of 7.76%. Firm A just paid a dividend of $1.40 per

image text in transcribed

Suppose the risk-free rate is 3.96% and an analyst assumes a market risk premium of 7.76%. Firm A just paid a dividend of $1.40 per share. The analyst estimates the of Firm A to be 1.28 and estimates the dividend growth rate to be 4.15% forever. Firm A has 278.00 million shares outstanding. Firm B just paid a dividend of $1.66 per share. The analyst estimates the of Firm B to be 0.87 and believes that dividends will grow at 2.96% forever. Firm B has 181.00 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_2

Step: 3

blur-text-image_3

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

International Business Competing In The Global Marketplace

Authors: Charles Hill

14th Edition

1260387542, 9781260387544

More Books

Students also viewed these Finance questions

Question

What is the difference between unstack and stacked variables?

Answered: 1 week ago