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TechNo Corp is a rapid-growth IT firm. TechNo expects to grow at 25% for the next four years. After year four, growth will moderate at
TechNo Corp is a rapid-growth IT firm. TechNo expects to grow at 25% for the next four years. After year four, growth will moderate at 4.75%. TechNo expects to pay a dividend of $1.59 per share next year. If TechNos required return is 13.2% and the stock is currently selling at $45.77 per share, is the stock fairly valued? If not, by how much is it over- or under-valued?
Answer: No, the stock is over-valued by $15.71 per share
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