Harvey Gorman expects earnings of $92.5 million at the end of the year (at t=1) and to pay dividends of $40.0 million and buy back shares worth $11.6 million. For the following 17 years, earnings should grow at 15.8% annually (until t = 18), after which should grow at 3.5% for a long time. If the firm's cost of equity capital is 13.2% and the dividend and repurchase rates are expected to stay unchanged, what is the total market value of the Harvey Gorman's equity? $ millions (Give answer to 2 decimal places)

Harvey Gorman expects earnings of $92.5 million at the end of the year (at t=1) and to pay dividends of $40.0 million and buy back shares worth $11.6 million. For the following 17 years, earnings should grow at 15.8% annually (until t = 18), after which should grow at 3.5% for a long time. If the firm's cost of equity capital is 13.2% and the dividend and repurchase rates are expected to stay unchanged, what is the total market value of the Harvey Gorman's equity? $ millions (Give answer to 2 decimal places)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 4P

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