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# 21. The current dividend is S2 for Stock A. The required rate of return is 8%. Suppose you believe the growth rate is 5% but it is really 60 0. What...

may i please get a detailed reason why \$36 is the solution ?

21. The current dividend is \$2 for Stock A. The required rate of return is 8%. Suppose you believe the growth rate is 5% but it is really 6%. ‘What is the dtﬂ'erence in the stock price between your estimate and the actual fair
‘ia'alue?r A. \$29.00
B. \$30.00
C. \$33.33
D. \$36.00 Table 5 Comparables Company 1 Company 2
PE 20 17.58 17.2
PJBV 7.84 8.21
PIS 2.91 2.5 2.99 High Tech BV per share 12 Sales per share 15

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