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The following are projected free cash flows to equity for a company that is expected to be in high growth for the next 3 years.
The following are projected free cash flows to equity for a company that is
expected to be in high growth for the next years. The firm's beta is also expected
to change over the year period:
Assume that after year the beta will stay at and that the growth rate will
remain forever the Beta will stay at forever as well The riskfree rate is
and you can assume a risk premium of
Estimate the value per share today. Hint: You have multiple Betas, so you will have
to compute a Required Return on Equity for each year. In addition, with a different
Required Return, you will have to discount each cashflow by the appropriate
Required Return for each year!
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