Question
As an analyst for a large investment banking house you are currently pondering whether you should issue a buy or sell recommendation to clients for
As an analyst for a large investment banking house you are currently pondering whether you should issue a buy or sell recommendation to clients for the stock of SNG. SNG's stock is currently selling for $15 per share. The firm's income and assets have been growing at an annual rate of 15% and are expected to do so for three more years. No dividends have been declared as of yet, but the firm intends to declare a $2.00 dividend at the end of the last year of its supernormal growth. After that, dividends are expected to grow at the firm's normal long-term growth rate of 6%. The firm's required rate of return on its stock is 18%. What are you recommending to your clients? If they follow your recommendation, how much money do you expect them to make?
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