Question: In this problem the beta is greater than 1.0, which indicates more systematic risk, which increases the required return and decreases the valuation. k=0.023+(0.0900.023)1.23=10.54% The

In this problem the beta is greater than 1.0, which indicates more systematic risk, which increases the required return and decreases the valuation.

In this problem the beta is greater than 1.0, which indicates more

k=0.023+(0.0900.023)1.23=10.54% The value of the stock is V=kgD0(1+g)=.1054.05$1.30(1+.05)=$24.64. k=0.023+(0.0900.023)1.23=10.54% The value of the stock is V=kgD0(1+g)=.1054.05$1.30(1+.05)=$24.64

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