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What is the intrinsic value of fii common stock

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Reference no: EM132702036

Problem 1: First Innovators, Inc. (FII) is presently enjoying relatively high growth because its latest new product is years ahead of its competition. Management expects earnings and dividends to grow at a rate of 40% for the next 4 years, after which its new product's competition will increase and reduce the growth rate in earnings and dividends to 2%, i.e., g = 2%. The company's last dividend, D0, was $2.75. FII's beta is 1.50, the market risk premium is 5.75%, and the risk-free rate is 3.50%. What is the intrinsic value of FII's common stock?

Reference no: EM132702036

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