Suppose the interest rate is 10 percent and the firm is expected to grow at a rate of 5 percent for the foreseeable future. The firm’s current profits are $100 What is the value of the firm (the present value of its current and future earnings)?   What is the value of the firm immediately after it pays a dividend equal to its current profits?

Q: If a firm earns $375 billion in profits for the year and they retain $218 billion, what is the…

A: As given Profit = $375 billion Retain amount = $218 billion

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A:

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