Terms of the fluctuations of the two-compute the price

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Reference no: EM131343201

There is a stock, which will not pay dividends for 6 years. Afterward, it will begin paying $1 out of a profit of $2.5 per share. We estimate that the firm will have an ROE of .20. The default free rate is 4%, the market premium is 6%, and the stock relates to the market 80%, in terms of the fluctuations of the two. Compute the price.

Reference no: EM131343201

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