1 The Ramirez Company's last dividend was $1 75 Its dividend growth rate is expected to be constant at 25 for 2 years, after which dividends are expected to grow at a rate of 6 forever Its required return is 12 What is the best estimate of the current stock price a $43 71 b $42 53 c $53 09 d $52 30 2 The 5 year average trailing P E of a stock is 18x The last year EPS was $4 25 and the estimated EPS for the next year is $4 50 Company also paid a dividend of $3 00 last year and is expected to pay a dividend of 3 10 next year Based on the companys own trailing P E, the stock is worth a $54 00 b $55 80 c $76 50 d $81 00

Question

1  The Ramirez Company's last dividend was $1 75  Its dividend growth rate is expected to be constant at 25  for 2 years, after which dividends are expected to grow at a rate of 6  forever  Its required return is 12   What is the best estimate of the current stock price  a  $43 71 b  $42 53 c  $53 09 d  $52 30 2  The 5 year average trailing P E of a stock is 18x  The last year EPS was $4 25 and the estimated EPS for the next year is $4 50  Company also paid a dividend of $3 00 last year and is expected to pay a dividend of 3 10 next year  Based on the companys own trailing P E, the stock is worth a  $54 00 b  $55 80 c  $76 50 d  $81 00

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1. The Ramirez Company's last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends

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