Teffla Electric Lawn Mowers is a young, but growing company. Analysts expect it to reach maturity during the year 2028. One analyst forecasts the companywill start paying annual dividends at the end of 2028 for the first time. She expects a dividend of $3.50 per share on December 31, 2028, and dividends togrow at 4% per year from then on. The appropriate discount rate for Teffla shares is 11% and it has 150 million shares outstanding.a) On January 1, 2028, what is the fair value of Teffla shares based on the analyst's prediction?b) What is the fair value of Teffla shares as of January 1, 2023?The same analyst also predicts that in 2024, the company will sell their battery technology division for $1.05 billion dollars. The proceeds from the sale willbe distributed as a one-time bonus dividend on December 31, 2024.c)What is you answer to question b) now?

Answered: Image /qna-images/answer/2d989ed8-97fd-40ce-b2aa-029235806ff4.jpg

Answered: a) On January 1, 2028, what is the fair…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Q15
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