Cost of equity = 2.4%+0.90(7.26%) = 0.08934 =8.934%
Value per share = Expected dividends per share next year/cost of equity-expected growth rate
($1.70)*(2.70%)/ (8.934%-2.70%) = $73.62
Value of firm B= 185000000*$73.62=13,621,270,452 mn
Suppose the risk-free rate is 2.40% and an analyst assumes a market risk premium of 7.26%....
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