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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
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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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)
Transcribed Image Text: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)
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