A firm s current profits are 400 000 These profits are
A firm’s current profits are $ 400,000. These profits are expected to grow indefinitely at a constant annual rate of 4 percent. If the firm’s opportunity cost of funds is 6 percent, determine the value of the firm.
a. The instant before it pays out current profits as dividends.
b. The instant after it pays out current profits as dividends.

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