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Estimating Price of a stock

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The Peoples company's last dividend was $1.75. The dividend growth rate is expected to be constant qt 1.50% for 2 years, after which dividends are expected to grow at a rate of 8% forever. People's required return is 12%. What is People's current stock price?

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Solution describes the steps for finding price of a stock based upon given information.

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Solution:

NPVGO model is to be used.

Price of stock will be equal ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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