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 B 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 ß 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? Submit Answer format: Currency: Round to: 2 decimal places.
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 B 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 ß 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? Submit Answer format: Currency: Round to: 2 decimal places.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![#5
Suppose the risk-free rate is 1.87% and an analyst
assumes a market risk premium of 6.80%. Firm A just
paid a dividend of $1.06 per share. The analyst
estimates the B of Firm A to be 1.21 and estimates the
dividend growth rate to be 4.05% forever. Firm A has
277.00 million shares outstanding. Firm B just paid a
dividend of $1.70 per share. The analyst estimates the B
of Firm B to be 0.77 and believes that dividends will
grow at 2.95% forever. Firm B has 194.00 million shares
outstanding. What is the value of Firm B?
8169.61
Submit
Answer format: Currency: Round to: 2 decimal places.
Show Hint
reattempted
incorrect
Correct Answer: $8,169,612,608.28
Points: 0
More Details
Attempts Remaining: Infinity
#5 O
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 ß 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 B
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?
Submit
Answer format: Currency: Round to: 2 decimal places.
unanswered
not_submitted
Attempts Remaining: Infinity](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F066a8f6b-0850-46b7-9749-7f575952e384%2Fc231d6d1-b625-4c93-9084-dd845f27c805%2F4n029l_processed.jpeg&w=3840&q=75)
Transcribed Image Text:#5
Suppose the risk-free rate is 1.87% and an analyst
assumes a market risk premium of 6.80%. Firm A just
paid a dividend of $1.06 per share. The analyst
estimates the B of Firm A to be 1.21 and estimates the
dividend growth rate to be 4.05% forever. Firm A has
277.00 million shares outstanding. Firm B just paid a
dividend of $1.70 per share. The analyst estimates the B
of Firm B to be 0.77 and believes that dividends will
grow at 2.95% forever. Firm B has 194.00 million shares
outstanding. What is the value of Firm B?
8169.61
Submit
Answer format: Currency: Round to: 2 decimal places.
Show Hint
reattempted
incorrect
Correct Answer: $8,169,612,608.28
Points: 0
More Details
Attempts Remaining: Infinity
#5 O
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 ß 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 B
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?
Submit
Answer format: Currency: Round to: 2 decimal places.
unanswered
not_submitted
Attempts Remaining: Infinity
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