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An earnings growth rate of 6 % . The firm s financial characteristics were excpected to approach industry average after 2 0 2 8 The

An earnings growth rate of 6%. The firms financial characteristics were excpected to approach industry average after 2028
The industry averages were as follows
Return of capital 12.5%
Debt/Equity ratio 25%
Interest Rate on Debt 7%
Suven Life Sciences Ltd Had a beta of 0.85 in 2023 and the unlevered beta was not expected to change over time
a) What is the expected growth rate in earnings, based upon fundamentals, for the high growth period 2024 to 2028?
b) What is the expected payout ratio after 2028?
c) What is the expected price beta after 2028?(Note: The unlevered beta is the beta of a company without any debt)
d) What is the expected price at the end of 2028?
e) Calculate yearly cash flows and estimate the value of the stock, using the two-stage dividend discount model.
f) How much of this value can be attributed to extraordinary growth and how much to the stable growth?

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