Really need help, 2 decimal places
"Suppose the risk-free rate is 1.34% and an analyst assumes a market risk premium of 5.67%. Firm A just paid a dividend of $1.42 per share. The analyst estimates the β of Firm A to be 1.46 and estimates the dividend growth rate to be 4.36% forever. Firm A has 288.00 million shares outstanding. Firm B just paid a dividend of $1.64 per share. The analyst estimates the β of Firm B to be 0.70 and believes that dividends will grow at 2.19% forever. Firm B has 189.00 million shares outstanding. What is the value of Firm B?"
r or cost of equity of B
=1.34%+0.70*5.67%
=5.31%
Price per share of B=((1.64*(1+2.19%))/(5.31%-2.19%))=53.72 per share
What is the value of Firm B
=((1.64*(1+2.19%))/(5.31%-2.19%))*189.00
=10152.18 million
the above is answer..
Really need help, 2 decimal places "Suppose the risk-free rate is 1.34% and an analyst assumes...
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