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Assume that the average firm in your company's industry is expected to grow at a constant growth of 6% and its dividend yield is 7%. Your company is as risky as the average firm in the industry. However, it has successfully completed some R&D work with investors expecting its earnings and dividends to grow 50% this year, 25% in the following year, with growth returning to the industry average of 6% in the third year and afterwards. If the last dividend paid (D0) was $1.00 per share, what is the estimated value per share of the firm's stock?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91727169

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