Market value of the firm: The market value of the firm can be defined as the value of the firm in the market, i.e. price of the firm according to the stock market. For example, the market price of one share of the company is $ 50 and there are 1000 shares outstanding, so the market value of the firm will be =$ 50 X 1,000 shares = $ 50,000 To determine: The market value of equity if the FCFF is projected to grow at 3% and the cost of equity is 12 %

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Chapter 13, Problem 13PS

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Concept Introduction:

Market value of the firm:

The market value of the firm can be defined as the value of the firm in the market, i.e. price of the firm according to the stock market. For example, the market price of one share of the company is $ 50 and there are 1000 shares outstanding, so the market value of the firm will be =$ 50 X 1,000 shares = $ 50,000

To determine:

The market value of equity if the FCFF is projected to grow at 3% and the cost of equity is 12 %

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