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Assumption that abnormal earnings growth forecasted

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Reference no: EM131209419

Cisco Systems traded at $20 per share on December 3, 2001. Analysts are forecastingearnings per share of 0.22 for 2002 and 0.39 for 2003. The firm does not pay dividends. Value Cisco on the assumption that abnormal earnings growth forecasted for 2003 willcontinue at the same level into the future. Use a cost of equity capital of 10%.

Reference no: EM131209419

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