# Question

A firm’s earnings and dividends are expected to grow at a constant rate indefinitely, and it is expected to pay a dividend of $8.75 per share next year. Expected EPS and BVPS next year are $12 and $48, respectively. The cost of equity is 10 percent and there are 10,000 shares outstanding. Calculate the firm’s value, assuming that the retention ratio stays the same and the market value of debt is $500,000.

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