LITUD. EIU-UI-CIldpler Problems - Stocks and Their Valuation Back to Assignment Attempts: 0 Keep the Highest: 0/1 13. Problem 9.13 (Constant Growth) eBook eBook Problem Walk- You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $3.00 a share at the end of the year (D1 = $3.00) and has a beta of 0.9. The risk-free rate is 4.8%, and the market risk premium is 6.0%. Justus currently sells for $48.00 a share, and its dividend is expected to grow at some constant rate, 9. Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is Ps?) Do not round intermediate calculations. Round your answer to the nearest cent. Hide Feedback Incorrect Post Submission Feedback Solution The problem asks you to determine the value of P3, given the following facts: D1 = $3, b =0.9, RF = 4.8%, RPM = 6%, and Po = $48. Proceed as follows: Step 1: Calculate the required rate of return: rs = lrf + (TM - PRF)b = 4.8% + (6%)(0.9) - 10.2%