What is your estimate of the company stock price today

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Question: A company currently pays a dividend of $2.00 per share (i.e., D0=$2.0). It is estimated that company's dividend will grow at a rate of 20% per year for the next three years, and the the dividend will grow at a constant rate of 0% (not 4%) thereafter. The company's stock has a beta of 1.5, the risk-free rate is 6%, and the market return is 12.50%. What is your estimate of the company's stock price today (i.e., P0)?

Reference no: EM131958226

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