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Business, 04.05.2021 01:00 bennettaly2452

Brutus Corporation develops a vaccine that will protect against bacterial infections. It is expected that Brutus will experience extremely high growth over the next four years and will reinvest all of its earnings in expanding the company over this time. Earnings were $1.20 per share before the development of the vaccine (at time zero) and are expected to grow by 40% per year for the next four years. After this time, it is expected that growth will drop to 6% and stay there for the expected future. Five years from now Brutus will pay dividends that are 70% of its earnings. Then, it will keep paying out 70% of the earnings. If its equity cost of capital is 11%, what is the value of a share of Brutus today

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