Suppose the risk-free rate (Rf) is 3.64% and an analyst assumes a market risk premium (Rm - Rf) of 7.50%. Firm A just paid a dividend of $1.05 per share (i.e., DO = 1.05). The analyst estimates the beta of Firm A to be 1.49 and estimates the dividend growth rate to be 4.13% forever. Firm A has 2.2 million shares outstanding. What is the market value of the equity of Firm A?

Answer rating: 100% (QA)

To calculate the market value of the equity of Firm A we can use the dividend disco... View the full answer