What is joe price estimate

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Reference no: EM132581973

Question 1: What is Joe's price estimate if he were to use a 3-stage growth model with growth assumptions of 30% for 3 years after the first year, followed by 20% for the next two years, and a long-term growth assumption of 6% thereafter? Assume that the firm pays a dividend of $1.50 per share at the end of the first year after IPO. Joe estimated required return to be 13.73% and used it to discount dividends.

Question 2: Based on the two estimates, how much per share Citrus Glow is really worth? Explain your rationale.

Question 3: What are the limitations of Joe's and Dan's valuation methods in your view? Which method do you prefer? Why?

Reference no: EM132581973

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