What is the value of a common stock if a). the firm's earnings and dividends are growing
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Question:
a). the firm's earnings and dividends are growing annually at 20 percent, the current dividend is $2.64, and investors require a 15 percent return on investments in common stock?
b). What is the value of this stock if you add risk to the analysis and the firm's beta coefficient is 0.8, the risk-free rate is 9 percent, and the return on the market is 15 percent?
c). If the price of the stock is $35, what is the rate of return offered by the stock? Should the investor acquire this stock? Explain your answer
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
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