Microsoft just paid a $8 dividend to its shareholders and its share has a current market price
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Question:
Microsoft just paid a $8 dividend to its shareholders and its share has a current market price of $160. Microsoft is forecasting to grow its dividend respectively by 35%, 30% and 20% in the next three years. Thereafter, the company is expected to grow at a constant rate of 10%.
Your client has a required rate of return of 15%. Considering your valuation and the current market price, would you advise to buy the stock? Explain why
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