Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. 49. victoria is interested in adding some klm, inc

49. Victoria is interested in adding some KLM, Inc. stock to her retirement account. She...

90.2K

Verified Solution

Question

Accounting

image
49. Victoria is interested in adding some KLM, Inc. stock to her retirement account. She observes that the stock just paid a dividend of $4.00 (i.e., D04.00 ). Based on her estimates, dividends will grow at 20% for the next two years (i.e., in years 1 and 2) and at 5% per year forever after that (i.e., in years 3,4,5,, ). Assuming a discount rate of 11.6%, Victoria estimates the value of each share of KLM. Inc. stock to equal \$ 50. Suppose the risk-free rate is 2.20% and analysts estimate that the market risk premium is 5.50%. Firm A just paid a dividend of $1.80 per share. The analyst estimates the of Firm A to be 1.22 and estimates the dividend growth rate to be 4.36% forever. If Firm A has 200,000 shares of common stock outstanding. what is the total market value of Firm A's equity (i.c., price per share times number of shares outstanding)? (Round your answer p to the nearest whole number (l.e, no decimal places): for example, enter 112,304.874 or 112,304.128 as 112305 )

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students