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Question 19. Consider the following financial information about stock XYZ: Stage 1: High Growth Stage (3 years) High growth rate: Stage 2: Stable Growth Stage

Question 19. Consider the following financial information about stock XYZ: Stage 1: High Growth Stage (3 years) High growth rate: Stage 2: Stable Growth Stage Stable growth 2% 20% rate: Net Income $500m Cost of equity 10% CAPEX $200m $40m Dep. ANCWC $50m Debt/Capital 20% Number of shares 100m Using a two-stage model, the estimated target price of this firm is equal to: A. $41 B. $67 C. $78 D. $95

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