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Problem:

A company currently pays a dividend of $1.25 per share (D0 = $1.25). It is estimated that the company's dividend will grow at a rate of 21% per year for the next 2 years, then at a constant rate of 6% thereafter. The company's stock has a beta of 1.15, the risk-free rate is 5%, and the market risk premium is 4%.

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Question: What is your estimate of the stock's current price?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91172912

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