Use three-stage and h-model valuation methods

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Reference no: EM131625456

Growth will transition from 15% down to 5% gradually, rather than instantaneously. If you believe that the transition will take five years, what is the value of the stock? Use three-stage and H-model valuation methods. Please show formulas in excel.

Given

Dividend 0 $0.60

Growth rate 5%

Transition growth rate 15%

Growth rate 2 5%

Period 1 length 3

Transition period length 5

Required return 9%

Current selling price $20.00

Reference no: EM131625456

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