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1. (16 pts) Generic Growth Co. has expected next period earnings of 3.50 per share, retains 42% of its earnings, has a market capitalization rate

1. (16 pts) Generic Growth Co. has expected next period earnings of 3.50 per share, retains 42% of its earnings, has a market capitalization rate of 8.5%, and expects to earn 12% on its new investments. a) Using a Dividend Discount Model, what is your estimate of its current share price? b) What is the estimated net present value of its future investments (PVGO)?

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