Question: X , Y , and Z are all equity financed firms. They follow a 1 0 0 % , 5 0 % and 2 5
X Y and Z are all equity financed firms. They follow a and dividend payout policies respectively. X expects before personal tax earnings of $ per share per year in perpetuity. Y expects before personal tax earnings of $ per share per year in perpetuity. Z expects before personal tax earnings of $ per share per year in perpetuity. Xs stock is trading at $ per share. It has a beta of Y is half as risky as X and Z is times as risky as Y Risk free rate of return is What should the current share prices of Y and Z be Assume the marginal personal tax rate on dividends is and on capital gains after adjusting for only half of the capital gain is taxable
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