Exam 1 – Finance 3321 - Texas Tech University

This initial period’s dividend is forecast to be $3.00 per share and is expected to grow at 6% per year in perpetuity. Assume WACC = 12%; the cost of equity is 14%; the cost of debt is 8% and the risk-free rate is 5%. The best estimate the today’s share value using the discounted dividends method is: a. $18.80. b. $21.42. c. $28.86. d. $32 ... ................
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