Question: The risk - free rate is 2 . 0 8 % and the market risk premium is 8 . 6 7 % . A stock

The risk-free rate is 2.08% and the market risk premium is 8.67%. A stock with a \beta of 1.15 just paid a dividend of $1.00. The dividend is expected to grow at 21.76% for five years and then grow at 4.39% forever. What is the value of the stock?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

I have already done most of the just need the last few in the General Ledger. I'm stuck at rent expense on down. ACC1010 Comp Prob 2 Student Template- Excel Heather Bigelow Insert Draw Page Layout...

Q:

Please complete all requirements Xenos Manufacturing Company manufactures blue rugs using wool and dye as direct materials. One rug is (Click the icon to view the additional information.) budgeted to...

Q:

In an auditorium with 500 people, one person will be chosen to win a $100 gift card. The rest of the people will receive a $0.25 key chain. a. What is the probability that you will be chosen to win...

Q:

Suppose that you just turned 25 years old and decide to put $4,786 into investments at the end of each year until age 60 (35 years from now). You have no savings.Your EAR is 7.1%.How much will you...

Q:

QUESTION 1 5 What represents investors' indifference curve in the CAPM model? A . The risk free rate B . The market return C . The market risk premium D . Beta QUESTION 1 6 Which of the following...

Q:

You find that the stock of a major airline has a beta of 1 . 4 . The current risk free rate is 2 % , and you estimate the market risk premium to be 6 % . What s the stock s expected return according...

Q:

Dividends for Neptune Inc. are expected to grow at a rate of 20% per year, for the next 3 years. The dividend growth rate then falls to a constant 5% per year, thereafter, forever. The company just...

Q:

A Stock in O corp currently sells for 80 a share and is expected to increase to 110 a sgare or decrease by 60 a share in one year. Call options on O stock which expire in one year are at an exercise...

Q:

I have some questions I would like help with. They are from my Finance 101 class. Can someone please help me? Q1. Jiffy Co. expects to pay a dividend of $3.00 per share in one year. The current price...

Q:

Felicia & Fred?s executive board has asked you to change the decision model previously completed to reflect the following changes regarding increased leverage, WACC, and cash flows. It is your job to...

Q:

Question 1 Bidvest is a diversified industrial company, listed on the Euronext Stock Exchange, and is one of the largest global food service distribution companies. The company is planning to acquire...

Q:

A drunk driver ran a red light and smashed into Kristen's car. The cost to repair the car is $8000. She has collision insurance on her car with a $500 deductible. a. Can Kristen collect from both the...

Q:

Benny Blanco owns Fitness Now, which showed the following selected transactions for the month ended May 31, 2017 Use the following accounts, from the company's chart of accounts, in your entries...

Q:

Differentiate. f ( x ) = x 7 e ^ x / x 7 + e ^ x

Q:

Deckton ltd. Is a largest successful Canadian controlled private corporation (CCPC) operating in multiple jurisdictions through permanent establishments in which carriers on the business of...

Q:

Steve makes $82,000 in salary and he has qualified for annual bonuses in each of the last 2 years, $4,500 and $7,500 respectively. His group benefits provide Long Term Disability (LTD) benefits after...

Q:

On October 10, the stockholders' equity section of Sherman Systems appears as follows. Common stock-$10 par value, 5,050 shares authorized, issued, and outstanding Paid-in capital in excess of par...

Q:

In Berk and DeMarzo the authors interview David Holland, who at the time was a Senior Vice President and Treasurer of Cisco, in that interview he states that Cisco uses robust NPV analysis, which...

Q:

As a financial analyst at Stanley Toy Company Inc. (STC), you have been asked to evaluate two capital investment alternatives submitted by the Manufacturing Department. Before beginning your...

Q:

Design a minimum-mass symmetric three-bar truss (the area of member 1 and that of member 3 are the same) to support a load P, as was shown in Fig. 2.9. The following notation may be used: Pu = P cos...

Q:

Hepatic g-glutamyl transpeptidase (GGTP) activity was measured in 22 patients undergoing percutaneous liver biopsy. The results were as follows: Subject Diagnosis Hepatic GGTP Level 1 Normal liver...

Q:

Ten subjects with exercise-induced asthma participated in an experiment to compare the protective effect of a drug administered in four dose levels. Saline was used as a control. The variable of...

Q:

The following table shows 15 randomly selected geographic areas ranked by population density and age-adjusted death rate. Can we conclude at the .05 level of significance that population density and...