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You expect that the growth rate of the Firm ABC will be 1 0 % for the next 3 years and 5 % from then

You expect that the growth rate of the Firm ABC will be

10 %

for the next

3

years and

5 %

from then on

.

The current dividend is $

3

per share. The current T

-

bill rate is

4 % .

The Firm has an equity risk premium of

8 % .

Show the process to find the fair value of the stock.

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