Suppose the risk-free rate is 3.65% and an analyst assumes a market risk premium of 7.45%. Firm A just paid a dividend of $1.44 per share. The analyst estimates the β of Firm A to be 1.30 and estimates the dividend growth rate to be 4.34% forever. Firm A has 261.00 million shares outstanding. Firm B just paid a dividend of $1.71 per share. The analyst estimates the β of Firm B to be 0.83 and believes that dividends will grow at 2.92% forever. Firm B has 182.00 million shares outstanding. What is the value of Firm B?

Suppose the risk-free rate is 3.65% and an analyst assumes a market risk premium of 7.45%. Firm A just paid a dividend of $1.44 per share. The analyst estimates the β of Firm A to be 1.30 and estimates the dividend growth rate to be 4.34% forever. Firm A has 261.00 million shares outstanding. Firm B just paid a dividend of $1.71 per share. The analyst estimates the β of Firm B to be 0.83 and believes that dividends will grow at 2.92% forever. Firm B has 182.00 million shares outstanding. What is the value of Firm B?

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Description: Suppose the risk-free rate is 3.65% and an analyst assumes a market risk premium of 7.45%. Firm A just paid a dividend of $1.44 per share. The analyst estimates the β of Firm A to be 1.30 and estimates the dividend growth rate to be 4.34% forever. Fi

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 14P

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