Which will not pay dividends for three years

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There is a stock, which will not pay dividends for 3 years. Afterward, it will begin paying $4 out of a profit of $10 per share. We estimate that the firm will have an ROE of .04. The default free rate is 2%, the market premium is 7%, and the stock relates to the market 70%, in terms of the fluctuations of the two. Compute the price.

Reference no: EM131332849

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