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A firm is expected to make $1 in free cash flow next year, $2 in free cash flow two years from now, and $4 in
A firm is expected to make $1 in free cash flow next year, $2 in free cash flow two years from now, and $4 in free cash flow three years from now. Then the firms free cash flow is expected to grow by 3% per year forever. The discount rate for the firms equity is 12%. What is a fair stock price for the firm (HINT: Use the 2-stage stock pricing valuation model)?
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