Managerial Economics & Business Strategy 7th Edition by Michael Baye, Stanley Brue, David MacPherson

تمرين 4

A firm's current profits are $550,000. These profits are expected to grow indefinitely at a constant annual rate of 5 percent. If the firm's opportunity cost of funds is 8 percent, determine the value of the firm:
a. The instant before it pays out current profits as dividends.
b. The instant after it pays out current profits as dividends.