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Suppose that NVIDIA Corporation (NVDA) is selling for $215.00. Analysts believe that the growth rate for NVDA will be 40% per year for the next
Suppose that NVIDIA Corporation (NVDA) is selling for $215.00. Analysts believe that the growth rate for NVDA will be 40% per year for the next two years, 20% per year for the following three years, and thereafter the growth rate will be 10% indefinitely. NVDA's most recent cash dividend per share was $5.00 The dividend will grow by the same rate as the company. Stockholders require a return of 18 percent on NVDA's common stock. Required: a) Based on the above assumptions, determine the price of NVDA's common stock. b) Explain whether an investor should buy the stock
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