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What is the value of the share using a multi-stage RIM

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Problem 1: A company has a book value of $11.00 per share. The Market Value Added over the next 10 years is expected to be $2.50 per share, giving it terminal book value of $13.50. The cost of equity is 6%, giving a present value of the MVA of $1.4. The expected market price of the share at the end of the tenth year is expected to be 2.9 times the book value. What is the value of the share using a multi-stage RIM?

Reference no: EM132883133

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