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Determine the per-share value

Problem:

Risk free rate              5.0%
Market risk premium    6.0%
Beta                            0.9
Expected growth           5.0%
dividend      $2.00

The year-end dividend will remain at $2.00 a share, but synergies will enable the dividend to grow at a constant rate of 7% a year (instead of the current 5%). There are plans to increase the debt ratio of the new subsidiary - the effects of this would be to raise beta to 1.1. What is the per-share value?

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Finance Basics: Determine the per-share value

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