Expected to grow indefinitely at constant annual rate

Reference no: EM13686667

A firm's current profits are $1,100,000. These profits are expected to grow indefinitely at a constant annual rate of 2 %. If the firm's opportunity cost of funds is 4.5 %, decide the value of the firm:

1. The instant after it pays out current profits as dividends.

2. The instant before it pays out current profits as dividends.

Reference no: EM13686667

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