Test: Test #$2(1$ attempt$)$

Question $20$ of $20$

This test: $100$ point$($s$)$ possible

This question: $5$ point$($s$)$ possible

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Question $12$

Question $13$

Question $14$

Question $15$

Question $16$

Question $17$

Integrative$-$Risk and valuation Giant Enterprises' stock has a required return of $13\mathrm{.}1\%.$ The company, which plans to pay a dividend of $$2\mathrm{.}34$ per share in the coming year, anticipates that its future dividends w increase at an annual rate consistent with that experienced over $2016-2022$ period, when the following dividends were paid: $$

a$.$ If the risk$-$free rate is $3\%,$ what is the risk premium on Giant's stock?

b$.$ Using the constant$-$growth model, estimate the value of Giant's stock. $($Hint: Round the computed dividend growth rate to the nearest whole percent.$)$

c$.$ Explain what effect, if any, a decrease in the risk premium would have on the value of Giant's stock.

Data table

a$.$ If the risk$-$free rate is $3\%,$ the risk premium on Giant's stock is $\%.($Round to one decimal place.$)$

b$.$ Using the constant$-$growth model, the value of Giant's stock is $$.($Round to the nearest cent.$)$

c$.$ Explain what effect, if any, a decrease in the risk premium would have on the value of Giant's stock. $($Select from the drop$-$down

A decrease in the risk premium would $$ the required rate of retum, which in turn would $$ the price of the stock. the price of the stock.

$\backslash$table$[[$Year$,$Dividend per Share$],[2022,$$$2\mathrm{.}21$