The companys last dividend d0 was 1.25 its beta is 1.20 the, Ask an Expert

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A company is presently enjoying relatively high growth because of a surge in the demand for its new product. The CFO expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company's last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. Based on this information, what is the current price of the common stock?

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Category:- Basic Finance
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