Healthcare Finance

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The book is Healthcare Finance by Gapenski Reiter 6th edition ISBN 9781567937411

Equity financing and securities for questions 12.1 - 12.6 and Capital structure and cost of capital for question 13.3 . Please show all work.

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Surname 1
Name
Supervisor
Course
Date
Problem 12.1
Answer
Company D

Company G

Last dividend paid = $6

Last dividend paid = $6

For dividends = $6

For growth = $2

Constant growth = 0%

Constant growth = 8.33%

Required rate of return = 15%

Required rate of return = 15%

Expected prices of stock= Stock price*(1+G) N

Expected prices of stock= Stock price*(1+G) N

Stock price= (1+G)* LDP / {R(R) -E(R)}

Stock price= (1+G)* LDP / {R(R) -E(R)}

Stock price = (1+0%) X 6/ (15%-0%) = $40

Stock price = (1+8.33%) X 6/ (15%-8.33%) = $97.45

Intrinsic values of stocks = $40 x (1+0%) 1 =

Intrinsic values of stocks = $97.45 x (1+8.33%) 1 =

$40

$105.57

Surname 2
Problem 12.2
Answer
The last dividend paid (D0) = $2.40
...


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