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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...

This question was created from Quiz_3_FIN_353_Version_A_Spring_2012_ANSWERS https://www.coursehero.com/file/7358963/Quiz-3-FIN-353-Version-A-Spring-2012-ANSWERS/

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

7358963-198302.jpeg

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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