You have been directed to determine the value of Company XYZ stock which is currently...
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You have been directed to determine the value of Company XYZ stock which is currently trading at $33.8. Company XYZ paid a dividend of $1.25 in the most recent year (Do). In addition, the risk free rate is 1.4% and the expected market risk premium is 3%. You have estimated Company XYZ's beta to be 1.2. You believe that Company XYZ dividends will grow at 7% per year for the first three years and at 4% thereafter. You also believe that expected market risk premium will be 5%, risk free rate will be 2.6%, and Company XYZ's beta to be 1.4 for the constant growth period. Calculate the required rate of return for Company XYZ for the next 3 years
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