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Please help fill in the following highlighted in Yellow. risk free =4% MRP = 8% 4. How far off would Joe's price estimate if he
Please help fill in the following highlighted in Yellow.
risk free =4%
MRP = 8%
4. How far off would Joe's price estimate if he were to use a 3-stage approach with growth assumptions of 30% for the first 3 years, followed by 20% for the next two years, and a long-term growth assumption of 6% thereafter Assume that the firm pays a dividend of $1.50 per share at the end of the first year. Dividend during Price at non- end of non- constant constant growth growth phase phase Period Growth rate 1 2 3 4 5 6 $ 1.50 Dividend in Year O Required Rate Intrinsic Value 4. How far off would Joe's price estimate if he were to use a 3-stage approach with growth assumptions of 30% for the first 3 years, followed by 20% for the next two years, and a long-term growth assumption of 6% thereafter Assume that the firm pays a dividend of $1.50 per share at the end of the first year. Dividend during Price at non- end of non- constant constant growth growth phase phase Period Growth rate 1 2 3 4 5 6 $ 1.50 Dividend in Year O Required Rate Intrinsic ValueStep by Step Solution
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