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Jimmy Lube's common stock currently sells for $50. The firm will pay its first annual dividend of $2.30 four years from now. After paying its
Jimmy Lube's common stock currently sells for $50. The firm will pay its first annual dividend of $2.30 four years from now. After paying its first dividend the dividend growth rate will be 8% forever. The required rate of return is 12%. Should you purchase the stock? Yes, because the stock is undervalued by $13.46. Yes, because the stock is undervalued by $7.52. No, because the stock is overvalued by $7.52. No, because the stock is overvalued by $9.07
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