A company is forecasted

Business & Finance
Tutor: None Selected Time limit: 1 Day

A company is forecasted to pay a dividend of $1.35 per share at the end of the year. That dividend is anticipated to grow at a constant rate of 8 percent per year in the future. The risk-free rate of interest is 2 percent. The firm’s beta is 1.73, and the market risk premium is 8.25 percent. The company's current stock price is

Jul 21st, 2015

Thank you for the opportunity to help you with your question!

dividents= $1.35 per share

growth of divdents=8%

risk free rate=2%

firm's beta=1.73

risk premium =8.25%

rate of growth of risk premium =2/100*x=8.25/100

x=8.25/2

4.125  thus 1.35*4.125

current stock price=$5.569

Please let me know if you need any clarification. I'm always happy to answer your questions.
Jul 21st, 2015

Great explanation you have done a supper job thank you very much.

Jul 21st, 2015

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Jul 21st, 2015
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Jul 21st, 2015
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