Suppose the risk-free rate is 3.78% and an analyst assumes a market risk premium of 7.37%....

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Suppose the risk-free rate is 3.78% and an analyst assumes a market risk premium of 7.37%. Firm A just paid a dividend of $1.47 per share. The analyst estimates the ẞ of Firm A to be 1.38 and estimates the dividend growth rate to be 4.32% forever. Firm A has 270.00 million shares outstanding. Firm B just paid a dividend of $1.53 per share. The analyst estimates the ẞ of Firm B to be 0.71 and believes that dividends will grow at 2.08% forever. Firm B has 185.00 million shares outstanding. What is the value of Firm A? Submit Answer format: Currency: Round to: 2 decimal places. Suppose the risk-free rate is 3.78% and an analyst assumes a market risk premium of 7.37%. Firm A just paid a dividend of $1.47 per share. The analyst estimates the ẞ of Firm A to be 1.38 and estimates the dividend growth rate to be 4.32% forever. Firm A has 270.00 million shares outstanding. Firm B just paid a dividend of $1.53 per share. The analyst estimates the ẞ of Firm B to be 0.71 and believes that dividends will grow at 2.08% forever. Firm B has 185.00 million shares outstanding. What is the value of Firm A? Submit Answer format: Currency: Round to: 2 decimal places.

Answer rating: 100% (QA)

To calculate the value of Firm A we can use the Gordon Growth Model also known as the Dividend Disco... View the full answer