You have been directed to determine the value of Ebay's stock which is currently trading at $33.8. Ebay paid a dividend

of $1.25 in the most recent year (Do). In addition, the risk free rate is 14% and the expected market risk premium is 3%

You have estimated Ebay's beta to be 1.2. You believe that Ebay's dividends will grow at 7% per year for the first three

and at 4% thereafter You also believe that expected market risk premium will be 5%, risk free rate will be 2.6%,

and ebays beta to be 1.4 for the constant growth period.

Calculate the required rate of return for Ebay for the next 3 years.

Answer rating: 100% (QA)

Solution To calculate the required rate of return for Ebay for the next 3 years we need to use the d... View the full answer