A firm recently paid a dividend of $2.05 per share, but analysts expect the dividend to decrease

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A firm recently paid a dividend of $2.05 per share, but analysts expect the dividend to decrease by 6% per year. The risk free rate is 1.5% and the market risk premium is 7%. If its beta is 2.25 and the market is in equilibrium.

What is the value of the stock?

Related Book For answer-question

Financial Reporting Financial Statement Analysis and Valuation a strategic perspective

ISBN: 978-1337614689

9th edition

Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

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Posted Date: Jun 15, 2023 02:22 AM

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A firm recently paid a dividend of $2.05 per share, but analysts expect the dividend to decrease

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Expert Answer:

To calculate the value of the stock we can use the dividend discount model DDM and the capital asset ... View the full answer

Financial Reporting Financial Statement Analysis and Valuation a strategic perspective

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