AT&T is a mature, established company paying dividends that have consistently increased each year. Its annual dividend

Question:

AT&T is a mature, established company paying dividends that have consistently increased each year. Its annual is currently $1.64. Assume for this question that you can earn 3% risk free, and that you expect the overall market to return 15%. AT&T has a beta of 0.80. Use CAPM and the constant growth valuation model to answer the following questions.
a. Find the required return according to CAPM. Do not round.
b. Find the value of AT&T according to the constant growth model, assuming that AT&T dividends will grow at 6% per year, which is the average growth rate of AT&T dividends over the last 10 years.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...