Specific Electric has a beta of 1.22. The risk free rate is 3.2% / The expected...
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Specific Electric has a beta of 1.22. The risk free rate is 3.2% / The expected return on the S&P 500 is 9.8%. Specific Electric just reported earnings per share of $6. SE maintains a dividend payout rate of 25%. The firm's earnings are expected to grow at 12% per year for the next three years, after which growth is expected to stabilize at 5% per year. (a) What is the expected return on SE Stock? (b)(i) What dividends does SE pay for the next 4 years? (ii) What is the current price of SE stock? (b)(i) Year Dividend (b)(ii) 0 1 2 3 4 Specific Electric has a beta of 1.22. The risk free rate is 3.2% / The expected return on the S&P 500 is 9.8%. Specific Electric just reported earnings per share of $6. SE maintains a dividend payout rate of 25%. The firm's earnings are expected to grow at 12% per year for the next three years, after which growth is expected to stabilize at 5% per year. (a) What is the expected return on SE Stock? (b)(i) What dividends does SE pay for the next 4 years? (ii) What is the current price of SE stock? (b)(i) Year Dividend (b)(ii) 0 1 2 3 4
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