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Best estimate of the current stock price

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The R Company's last dividend was $1.75. Its dividend growth rate is expected to be constant at 25% for 2 years, after which dividends are expected to grow at a rate of 6% forever. Its required return (rs) is 12%. What is the best estimate of the current stock price? If you stock is selling at $25 in the market today would you recommend buying it? Why?

Reference no: EM132265961

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