Question
This is the question I need help on: Suppose the risk-free rate is 2.02% and an analyst assumes a market risk premium of 6.20%. Firm
This is the question I need help on:
Suppose the risk-free rate is 2.02% and an analyst assumes a market risk premium of 6.20%. Firm A just paid a dividend of $1.26 per share. The analyst estimates the of Firm A to be 1.20 and estimates the dividend growth rate to be 4.32% forever. Firm A has 269.00 million shares outstanding. Firm B just paid a dividend of $1.74 per share. The analyst estimates the of Firm B to be 0.81 and believes that dividends will grow at 2.73% forever. Firm B has 189.00 million shares outstanding. What is the value of Firm B?
EXAMPLE PROBLEM WITH CORRECT ANSWER FOR REFERENCE BELOW: **This is for referencing the answer to make sure its done right. Thank you
Suppose the risk-free rate is 2.50% and an analyst assumes a market risk premium of 6.84%. Firm A just paid a dividend of $1.27 per share. The analyst estimates the of Firm A to be 1.35 and estimates the dividend growth rate to be 4.94% forever. Firm A has 282.00 million shares outstanding. Firm B just paid a dividend of $1.94 per share. The analyst estimates the of Firm B to be 0.78 and believes that dividends will grow at 2.64% forever. Firm B has 199.00 million shares outstanding. What is the value of Firm B? Answer: $7,627,271,019.40
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