Am Bev Co. currently has a total market value of $100 million, no debt, and 10 million shares outstanding.

Published by admin at October 20, 2023

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Am Bev Co. currently has a total market value of $100 million, no debt, and 10 million shares outstanding. The firm is expected to pay $20 million of dividends next year, Year 1, and thereafter the amount paid out is expected to grow by 10% a year in perpetuity.

I) What is the current share price?

II) What is the implicit discount rate, r, on equity?

Am Bev Co. currently has a total market value of $100 million, no debt, and 10 million shares outstanding.

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