Suppose you believe that the economy is just entering a recession. Your firm must raise capital immediately, and debt will be used. Should you borrow on a long-term or a short-term basis? Why?
To determine: Expected stock price 4 year from today.
Introduction:
Stock valuation of a constant growth
It is method of calculating company stock value; the valuation of the stock on the basis on the present value of the future cash flow or earnings on the constant growth.
Determine the current price of the stock:
Therefore, current price of the stock is $27.50
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