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Homework answers / question archive / Jake Ltd
Jake Ltd., is a fast growth share and expects to grow at a rate of 25 percent for the next four years. It then will settle to a constant-growth rate of 10 percent. The first dividend will be paid out in year 3 and will be equal to $5.00. If the required rate of return is 17.47 percent, what should the current price of the share be?
a.
$54.70
b.
$47.51
c.
$42.57
d.
$48.90
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