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The first 4 years A pays a dividend of $ 5 per annum.A has a P/E of 12. In year 5, A has 1 m
The first 4 years A pays a dividend of $ 5 per annum.A has a P/E of 12. In year 5, A has 1 m shares outstanding and $140 m of book value of equity, as well as $160 million of debt. A expects to sell $50m worth of salesand have EAT of $5m and keep 90% of its profit. Furthermore, its tax rate is .4, and its unlevered bheta is 1.5.The 10 year t bond rate is 6% while the ROR in the S&P has been 10 %. CalculateA's price, if we assume that its growth rate is constant after year 4.
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