A firm's current profits are $450,000. These profits are expected to grow indefinitely at a constant annual rate of 3 percent. If the firm's opportunity cost of funds is 6 percent, determine the value of the firm: Instructions: Round your responses to 2 decimal places.   a. The instant before it pays out current profits as dividends. $ million   b. The instant after it pays out current profits as dividends. $ million

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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A firm's current profits are $450,000. These profits are expected to grow indefinitely at a constant annual rate of 3 percent. If the firm's opportunity cost of funds is 6 percent, determine the value of the firm:

Instructions: Round your responses to 2 decimal places.

 

a. The instant before it pays out current profits as dividends.

$ million

 

b. The instant after it pays out current profits as dividends.

$ million 

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