The companys common stock is going to pay a dividend is $2.00 per share after one year.
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The company’s common stock is going to pay a dividend is $2.00 per share after one year. Dividends are expected to grow at 10 percent per year for 2 years after that ($2.20 two years from now, and $2.42 3 years from now), and 4% thereafter. The expected market return is 6%, your stock has a beta of 1.2. The return on riskless government bonds is 2%. Assuming CAPM is correct, what should be the price of the stock?
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