Question
Sophia estimates the rate of growth of dividends for XYC will be 15% for the next 3 years. The market capitalization rate for XYC is
Sophia estimates the rate of growth of dividends for XYC will be 15% for the next 3 years. The market capitalization rate for XYC is 11%. After this initial period of 3 years, the dividend is expected to grow at a rate of 4% forever after. You forecast that the dividend next year (this includes 1 year of growth at a rate of 15%) will be $0.84. Calculate Sophia's intrinsic value for XYC.
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Public Finance and Public Policy
Authors: Jonathan Gruber
4th edition
1429278455, 978-1429278454
