Question: The risk - free rate is 3 . 2 4 % and the market risk premium is 8 . 5 3 % . A stock

The risk-free rate is 3.24% and the market risk premium is 8.53%. A stock with a \beta of 1.77 just paid a dividend of $1.92. The dividend is expected to grow at 24.66% for five years and then grow at 4.71% 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:

If the coefficient of static friction between the axe and the wood is s = 0.2, determine the smallest angle of the blade which will cause the axe to be self-locking. Neglect the weight of the axe....

Q:

Intrinsic Value of Merger target Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1.5 million shares outstanding and a target capital structure consisting of 30% debt;...

Q:

D. unsystematic risk. 16. Wendy purchased 800 shares of Genetics Stock at $3 per share on 1/1/12. Wendy sold the shares on 12/31/12 for $3.45. period return is Genetics stock has a beta of 1.9, the...

Q:

explain each step please (b) Consider the table below relating to companies ABC and XYZ. Company ABC Forecasted Return 12% Standard Deviation 8% Beta 1.5 XYZ 11% 10% 1.0 Assume that the risk free...

Q:

Current price =$66.33(answer to first one) Hastings Corporation is interested in acquiring Visscher Corporation. Assume that the risk- free rate of interest is 4%, and the market risk premium is 5%....

Q:

You see a mature, stable stock with a high dividend payout that you want to value. The stock paid a dividend of $1.42 per share over the past twelve months. Dividends are growing at a constant rate...

Q:

You have recently been looking over 3 stocks to consider purchasing that might be "good" values and you have calculated the expected returns. The current risk free rate is 3%, and you estimate the...

Q:

Given the following information from Capstone Corporation, what price would CAPM predict that the company's stock will trade for 1 year from today. Assume that the risk free rate is 3 percent and...

Q:

ZAPCOVID Corporation pays an annual dividend of $2.00 per share and is expected to grow at the rate of 20%, 15% and 10% for the next three years respectively followed by a constant growth of 8%...

Q:

Suppose the risk free rate of interest is 4% and the market risk premium is 5%. A company with a stock beta of 1.2 has a cost of equity closest to: A. 1.2%. B. 6%. C. 10%.

Q:

Consider the table below relating to two competing companies: [10 Marks] Company Expected Return Standard Deviation Beta $1 Discount Store 12% 8% 1.5 $5 Everything 11% 10% 1.0 Assume that the risk...

Q:

Credit Card Sales Gas stations sometimes sell gasoline at a lower price to customers who pay cash than to customers who use a credit card. A local gas station owner pays 2% of the sales price to the...

Q:

Describe atomic theory and discuss how it explains the great variety of different substances. How does it explain chemical reactions?

Q:

Robert invested in stock and received a positive return over a 9 minus month period. Which of the following types of returns will be greater? Question content area bottom Part 1 A . Annual percentage...

Q:

2023 1040 form 1.Phillip and Claire are married and file a joint return. Phillip is self-employed as a real estate agent, and Claire is a flight attendant. Phillip and Claire have three dependent...