Kyle is analyzing a private company’s stock value using the adjusted dividend discount model. While the company does not pay dividends, he expects to sell the stock in three years. The company just reported earnings of $5.75 per share and expects earnings to grow at 25% for the next two years, 15% in year 3 and 10% per year in year 4 and thereafter. The average PE of similar companies is expected to be 12 in three years. If Kyle expects the company’s required rate of return to be 18% in three years, the estimated current value of the stock is _____.
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