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Use the information in the table below to answer questions 2 and 3. Assume that both Firm A and Firm B have a risk-adjusted equity
Use the information in the table below to answer questions 2 and 3. Assume that both Firm A and Firm B have a risk-adjusted equity cost of capital of 20%. Firm A Firm B Reported EPS $12 $12 60% Analyst's EPS decomposition: Permanent component Transitory component Value-irrelevant component 80% 10% 10% 35% 5% 2) The implied share price of Firm A's stock is a. $12.00. b. $48.00. c. $49.20. d. $54.40
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