What is the current price of van buren stock

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1. Valuation Van Buren currently expects to pay a year-end dividend of $2.00 a share (D1 = $2.00). Van Buren's dividend is expected to grow at a constant rate of 5%a year, and its beta is 0.9. What is the current price of Van Buren's stock?

2. Merger valuation Harrison estimates that if it requires Van Buren, the year-end dividend with remain at $2 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 raise Van Buren's beta to 1.1. What is the per-share value of Van Buren to Harrison Corporation?

Reference no: EM131773033

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