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1. Your research has produced the following for the ABC Company: ABC's most recent dividend per share was $2 and you have forecasted dividend growth rates for the next 6 years are as follows: O B1 = 30% O 82 = 20% O g3 = 12% O 84 = 9% O 85 = 7% O g6 = 6% You have forecasted that dividends will grow at a constant perpetual growth rate of 5% per year starting in year 7. You have estimated Systematic Risk for ABC by CAPM regression which resulted in a Beta coefficient of 1.21 while the market risk premium is forecasted to be 7% and the risk-free rate is 3%. Given this information, answer the following: a. What is the required return on equity for ABC? (10 points) b. What is the forecasted dividend per share value for year 7? (10 points) c. What is the target price, or terminal value, for ABC in Year 6? (10 points) d. What is the estimated value per share of ABC stock today? (10 points) e. If the current stock price quote for ABC is $59, would you make a BUY, SELL, or HOLD recommendation for ABC? Briefly explain why with only one sentence.

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- ABC 's most recent dividend per share was $2 and you have forecasted dividend growth rates for the next 6 years are as follows: g1=30%g2=20%g3=12%g4=9%g5=7%g6=6% - You have forecasted that dividends will grow at a constant perpetual growth rate of 5% per year starting in year 7. - You have estimated Systematic Risk for ABC by CAPM regression which resulted in a Beta coefficient of 1.21 while the market risk premium is forecasted to be 7% and the risk-free rate is 3%. - Given this information, answer the following: a. What is the required return on equity for ABC ? (10 points) b. What is the forecasted dividend per share value for year 7 ? (10 points) c. What is the target price, or terminal value, for ABC in Year 6 ? (10 points) d. What is the estimated value per share of ABC stock today? (10 points) e. If the current stock price quote for ABC is $59, would you make a BUY, SELL, or HOLD recommendation for ABC? Briefly explain why with only one sentence. (10 points)

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