Question: I need to calculate the answer to this problem and dont know how to. Consider the pharmaceutical company, Seltaeb Corp which is weathering the current

 I need to calculate the answer to this problem and dont

I need to calculate the answer to this problem and dont know how to.

know how to. Consider the pharmaceutical company, Seltaeb Corp which is weathering

Consider the pharmaceutical company, Seltaeb Corp which is weathering the current environment well through its development of anti-virus drugs. While last year's earnings from existing projects (steady-state earnings) were $3 per share, analysts are forecasting that Seltaeb will experience two years of abnormally high growth of 25% before settling down to a normal growth rate of 5% in year 3 and beyond. Seltaeb paid an annual dividend of $4 per share last year and the CEO has announced that dividend payments will mirror the growth in the company going forward. Assume that the current risk-free rate of interest is 2%, the expected long-run return of the S&P500 index is 10% and Seltaeb's beta is 1.5 What is the market's estimate of Seltaeb's present value of growth opportunities

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