Firm which does not pay any distribution of profit

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There is a firm which does not pay any distribution of profit for 6 years. In year 6 it pays dollar 3 out of dollar 5. The dividend remains constant for 4 years. Afterward, it grows perpetually. The ROE is .05. The beta levered is 1.5, while the default free rate is 5 percentage and the market premium is 6 percentage. Derive the price.

Reference no: EM131176372

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