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Find the? stock intrinsic value

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Reference no: EM132246892

A particular company currently has sales of? $250 million; sales are expected to grow by? 20% next year? (year 1). For the year after next? (year 2), the growth rate in sales is expected to equal? 10%. Over each of the next 2? years, the company is expected to have a net profit margin of? 8% and a payout ratio of 56?%, and to maintain the common stock outstanding at 13.74 million shares. The stock always trades at a? P/E of 14.57 times? earnings, and the investor has a required rate of return of 19?%. Given this? information:

a. Find the? stock's intrinsic value? (its justified? price).

b. Use the IRR approach to determine the? stock's expected? return, given that it is currently trading at ?$16.06 per share.

c. Find the holding period returns for this stock for year 1 and for year 2.

Reference no: EM132246892

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