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Suppose A compan y has a current book value of $ 4 0 per share. The earning p er share one year from now is
Suppose A company has a current book value of $40 per share. The earning per share one year from now is $9per share,(EPS1=9) and earning is expected to grow 4% forever. If the discount rate is 10%, calculate the value of company As stock now according to the residual Income model if there are no dividends. (assume clean surplus relationship is true)
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