An analyst collected the following information about a company: The stock is currently trading at $31.00 per
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Question:
An analyst collected the following information about a company:
The stock is currently trading at $31.00 per share.
The estimated growth rate for the next three years is 25%.
Starting in year 4, the growth rate is expected to decrease and stabilize at 8%.
The profitability required for this type of company is estimated at 15%.
The dividend in year 1 is estimated to be $2.00.
The stock is undervalued by approximately:
A.$15,70.
B.$0.00.
C.$6,40.
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