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Estimate the price of EFT Limited shares

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Reference no: EM133021012

Question - Below is the following information about EFT Limited, a manufacturer of cleaning products:

Its most recent dividend was $2.00 per share.

The dividend is expected to grow at 10% for the next three years, then decline to 4% forever.

According to the CAPM the required return for EFT Limited is 15%.

(a) Estimate the price of EFT Limited shares

(b) If the beta of EFT Limited fell, what do you expect would happen to the price of its shares?

Reference no: EM133021012

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