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Assume a firm will pay its first dividend in 2 years. This initial period’s dividend is forecast to be $3.00 per share for the first 3 years and then is expected to grow at 4% per year in perpetuity. Assume WACC = 12%; the cost of equity is 16%; the cost of debt is 8% and the risk-free rate is 5%. The best estimate the today’s share value using the discounted dividends method is:

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Financial Management, Finance

Category:- Financial Management
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