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Suppose you are assigned the task of finding the theoretical value of Firm ABC. Firm ABC has the following capital structure: Capital Type Number Common

Suppose you are assigned the task of finding the theoretical value of Firm ABC. Firm ABC has the following capital structure:

Capital Type

Number

Common Stock

45,000 shares

Coupon Bonds

2,400 bonds

Preferred Stock

22,000 shares

Zero Coupon Bonds

1,100 bonds

The common stock just paid a dividend of $2.23 and they expect short-term growth of 8% for the first three years, followed by a constant growth rate of 4% thereafter. The coupon bonds pay a 7% coupon rate, semiannually and have 13 years left until maturity. The preferred stock pays a 4% dividend and a face value of $100. The zero coupon bonds have 24 years left until maturity and are compounded semiannually. Both of the bonds have face value of $1,000. Finally, the required rates of return are as follows for each.

Capital Type

"k"

Common Stock

11.4%

Coupon Bonds

7.3%

Preferred Stock

4.1%

Zero Coupon Bonds

2.2%

What total value would you put on the firm?

could you assist me with this one as well after you help me with the first one. thanks

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