Compute what best estimate of stock current market value

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Reference no: EM132648404

Problem 1: Burke Tires just paid a dividend of D0 = $2.00. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock's current market value?

Select the correct answer.

a. $67.98
b. $70.94
c. $69.46
d. $70.20
e. $68.72

Reference no: EM132648404

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