What is the value of an all-equity firm that: a. Has a dividend payout ratio of 100

Question:

What is the value of an all-equity firm that:

a. Has a dividend payout ratio of 100 percent

b. Is expected to generate net income each year (forever) of $1 million,

c. Has a required equity return (also the ROE) of 16 percent?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...