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Erica is analyzing the shares of SongatikamasCompany. The Company currently pays a dividend of $2.50. She believes the company has a new product that will
Erica is analyzing the shares of SongatikamasCompany. The Company currently pays a dividend of $2.50. She believes the company has a new product that will result in supernormal growth of 20% for two years. Once the market for this product is saturated, she expects the Songatikamas growth will fall to 3%, which is equal to the level of world economic growth. Erica determines that the required return on Songatikamasshould be 12%. What is the value of Songatikamas shares?
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