Lee' food fair's stock has a beta value of 1.5 last year the company paid a dividend of $2.30 and expects a constant growth rate of 5% in dividends per share, earnings and stock price. assume that the current risk free rate is 7% and market risk premium is 6%

i) Calculate the required rate of return for the stock?

ii) What is the equilibrium price of the stock?

b) A telecommunication company is expected to enjoy dividend growth of 22% for next 2 years, after which the dividend growth is expected to follow a constant rate of 8%. the company last dividend was $1.75 and stockholder's required rate of return is 15%.

i) Calculate intrinsic value of stock today.

Answer rating: 100% (QA)

i To calculate the required rate of return RRR for Lees Food Fairs stock we can use the Capital Asse... View the full answer