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A firm is not expected to pay a dividend for the next three years. If the...

A firm is not expected to pay a dividend for the next three years. If the expected share price of the firm in three years in $29 and investors require a 11% rate of return, what is the expected share price today?

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Expert Solution

Expected share price today=Share price in 3 years/((1+required rate)^number of years)

=29/((1+11%)^3)

=21.20

Expected share price today=$21.20

jeff jeffy answered 2 years ago
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