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Price of Stock Range of Variables

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Consulting Inc. is presently enjoying relatively high growth because of a surge in the demand for its new services. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g=0. The company's last dividend, D(0), was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?

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The price of stock range of variables are examined.

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Price of Stock
Need help determining stock values based on a range of variables...

Consulting Inc. is presently enjoying relatively high growth because of a surge in the demand for its new services. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will ...

Purchase this Solution
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