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Determine the market capitalization of the stock

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Reference no: EM133171237

Question - Your firm is considering an investment in MMM Pharmaceuticals and you have been asked to analyze their common stock. MMM currently has fifty million ordinary shares outstanding. Dividends are expected to grow super normally at a 30%, 22% and 15% in years one, two and three respectively, after which the growth rate is expected to settle at 3% into perpetuity. The stock is considered to be of average risk and last paid a dividend of $0.50 per share. T-Bills are currently yielding 4% and the market risk premium is currently 5%.

Required -

a. Differentiate between fundamental and technical analysis.

b. Determine the required rate of return on MMM stock.

c. Determine the market capitalization of the stock.

Reference no: EM133171237

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