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QUESTION
A firm's current profits are $1,400,000. These profits are expected to grow indefinitely at a constant annual rate of 4 percent.
A firm's current profits are $1,400,000. These profits are expected to grow indefinitely at a constant annual rate of 4 percent. If the firm's opportunity cost of funds is 7 percent, determine the value of the firm
a. The instant before it pays out current profits as dividends. $ millionb. The instant after it pays out current profits as dividends. $ million
