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What is the amount of horizon or terminal value of abi bag

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Reference no: EM133140892

Question - ABI Bags' stock price is P48.5 and it recently paid a P 1.75 dividend. The dividend is expected to grow by 15% for the next three (3) years, then grow forever at a constant growth rate. The risk-free rate and average rate of return on the market are 4% and 8% respectively. The beta coefficient of ABI Bags' stock is 1.5 aggressive beta. The Weighted average cost of capital (WACC) is 8%.

Required -

1. What is the amount of Horizon or Terminal Value of ABI Bag?

2. At what constant rate is the stock expected to grow after the third (3rd) year?

3. What is the ABI Bag's stock price in year 2 (P2)?

Reference no: EM133140892

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