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3 . A rapidly growing firm is currently paying a dividend of $ 2 . 9 5 . The dividend growth rate is expected to

3. A rapidly growing firm is currently paying a dividend of $2.95. The dividend growth rate is expected to be 8% for the next 3 years, 6% for the following 2 years, and 4% annually thereafter. The expected return on the market is 10%, the risk-free rate is 5% and the firms Beta is 1.20.
a. Calculate the estimated price (intrinsic value) for a share of this firms stock.
b. Use Goal Seek to determine what the current dividend would need to be to yield an estimated price (intrinsic value) of $70.

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