Problem 7.18 – Growing Quickly

Essentials of Corporate Finance

Ross, Westerfield, and Jordan

10th Edition and 11th Edition

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Difficulty – Medium

Given the expected growth rate of dividends for the next three years and a constant rate thereafter, along with the required return and the recent dividend payment, what is the current share price. Determine the share price given an initial high growth rate followed by a constant growth rate thereafter.

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