Afirm's current profits are $650,000. these profits are expected to grow indefinitely at a constant annual rate of 5 percent. if the firm's opportunity cost of funds is 7 percent, determine the value of the firm: round your responses to 2 decimal places. a. the instant before it pays out current profits as dividendsb. the instant after it pays out current profits as dividends.

before disrtibution of dividends: 34,125,000

                     after distribution:    33,475,000

Explanation:

we will calculate this using the gordon model for dividen grow but using the firm income asdividends instead:

income zero: 650,00

income next year: 650,000 x 1.05 = 682,500

return 7%

grow 5%

firm value: 34.125.000‬

once it distribute dividends, the equity will decrease by that ammount:

34,125,000 - 650,000 = 33,475,000

answer; competency based pay;