Estimate of stock current price


A company currently pays a dividend of $2 per share (D(0)=$2). It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 7% thereafter. The company's stock has a beta of 1.2, the risk-free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock's current price?

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Finance Basics: Estimate of stock current price
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