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Assume that Bon Temps is expected to experience supernormal growth of 30% for the next 3 years, then to return to its long-run constant growth rate of 6%. What is the stock’s value under these conditions?
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Assume that Bon Temps is expected to experience supernormal growth of 30% for the next 3 years, then to return to its long-run constant growth rate of 6%. What is the stock’s value under these conditions? What are its expected dividend yield and its capital gains yield in Year 1? In Year 4?

User Shoan
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2 votes

Answer:

Expected value one year from now=D2/(k-g)

=2.25/(16%-6%)

=22.5

Step-by-step explanation:

User Anther
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