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Question: The Buccaneer Corporation has announced a dividend to be paid this year of $2.00 per share (D1 = $2.00) On the basis of review of similar-risk opportunities, they must earn at least an 18% rate of return on all investments.

a. What is the firm's value if cash flows are expected to have a zero growth rate from now to infinity?

b. What is the firm's value if cash flows grow at a constant rate of 7% from now to infinity?

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Category:- Basic Finance
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