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Nonconstant growth: Starskeep, Inc., is a fast growing technology company. The firm projects a rapid growth of 40 percent for the next two years and
Nonconstant growth: Starskeep, Inc., is a fast growing technology company. The firm projects a rapid growth of 40 percent for the next two years and then a growth rate of 20 percent for the following two years. After that, the firm expects a constant-growth rate of 8 percent. The firm expects to pay its first dividend of $1.25 a year from now. If your required rate of return on such stocks is 20 percent, what is the current price of the stock?
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