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A firm at present pays a dividend of $2.00 per share, It is estimated that the firm's dividend will grow at a rate of 20 percent per year for the next 2 years, then the dividend will grow at a constant rate of 7% thereafter. The company's stock has a beta equal to 1.2, the risk-free rate is 7.5%, and the market risk premium is 4 percent. What is your estimate of the stock's current price?

Please show your all calculations.

 

Managerial Economics, Economics

  • Category:- Managerial Economics
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