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Finance

Problem:

A company currently pays a dividend of $3.5 per share (D0 = $3.5). It is estimated that the company's dividend will grow at a rate of 23% per year for the next 2 years, then at a constant rate of 6% thereafter. The company's stock has a beta of 0.8, the risk-free rate is 3.5%, and the market risk premium is 4%.

Required:

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

Note: Show all workings.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91149159

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