(Solved by Humans)-Big Petroleum Company has just paid a $1 dividend. Due to a

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Type of Paper:

Academic Level: Undergrad. (yrs 3-4)

Paper Format: APA

Pages: 5 Words: 1375

Question

Big Petroleum Company has just paid a $1 dividend. Due to a recent discovery of a rich oil

well on a patch of land leased by the company in central Africa, it is estimated that the

company will grow by 40% per year for the next 3 years and 20% for 2 year after that.

Afterwards, the company?s growth will slow to 7% per year, and this growth rate is expected

to continue into the foreseeable future. The required rate of return on similar stocks in the

financial market is 15%. What is the price of a share of Big Petroleum Company?



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