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Problem:

The firm projects a rapid growth of 40 percent for the next two years and then a growth rate of 20 percent for the following two years. After that the firm expects to pay its first dividend of $1.25 a year from now.

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Question: If your required rate of return on such stocks is 20 percent, what is the current price of the stock?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91169727

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