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Accounting

Problem:

Harrison estimates if it acquires Van Buren, the year end dividend will remain at $2.00 a share but synergies will enable the dividend to grow at a constant rate of 7% a year (instead of the current 5%) Harrison also plans to increase the debt ratio of what would be its Van Buren subsidiary - the effect of this would be to rais Van Buren's beta to 1.1.

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Question: What is the per share value of Van Buren to Harrison Corporation?

Note: Provide specific examples to support your answers.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170362

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