Gekay inc currently january 1 has a net income of 10000000, Ask an Expert

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GeKay Inc. currently (January 1) has a net income of $10,000,000 which is expected to grow indefinitely(perpetuity) at 10% per annum.

The firm is financed at a debt-to -value ratio of 30%. The firm has a 50% dividend payout to shareholders (dividends paid at year-end), with 10m shares of common stock outstanding.

The firm pays taxes at the 36% rate. The stock has a (levered) Beta of 1.2 and the market risk premium (MRP) is 6%. The risk free rate (RF) is 4% and the firm's Cost of Debt is 5.5%.

Determine the stock price?

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Corporate Finance, Finance

Category:- Corporate Finance
Reference No.:- M9535316

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