Find the current price using given data

Reference no: EM132041719

Question: Please explain how you reached the answer and show BOTH the formulas you are using and your mathematical calculations.

Bookstore Inc. just paid a dividend of $1.75. They expect dividends to grow at 20% for the next 2 years. After year 2, the firm will have a retention rate of 25%. The ROE will remain at 40%. If the required return is 16%, find the current price.

Reference no: EM132041719

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