XYZ’s current dividend per share is $1.07. You expect dividends to grow at 5% per year into perpetuity. XYZ’s beta is 0.85. The current risk free rate is 2.9%, and the expected return on the market portfolio is 7.4%. Use the CAPM to estimate XYZ’s required return on equity. What is the underlying value of the XYZ stock per share?

Answer rating: 100% (QA)

As per CAPM expected return riskfree rate beta expect... View the full answer