Briarwoods cost of equity is 16 percent. The best estimate for 18.4 Briarwoods long-term growth rate is 4 percent.a. What is the equity value of the hospital?b. Suppose that the expected long-term growth rate was 6 percent.What impact would this change have on the equity value of thebusiness? What if the growth rate were only 2 percent?Solution:(a)Since growth rate is given Value of Equity of Bariawood can be calculated by using Growth ModelAs per Growth Model,Value of Equity = Dividend paid at the end of Year 1/(Cost of…
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