Question: A stock has the following data: Current cash flow per share: $ 12 Growth rate for the next three years: 40% Long term growth rate

A stock has the following data:

  • Current cash flow per share: $ 12
  • Growth rate for the next three years: 40%
  • Long term growth rate after 3 years : 1.5%
  • It will pay a dividend 20% of cash flow in yr 4.
  • The current risk free rate= .64%; Return of the market = 10%
  • The stocks beta = .09

Using the above data and CAPM to calculate its stock price.

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