What is the most you should pay for the stock?

Aug 7th, 2015
Business & Finance
Price: $60 USD

Question description

The risk-free on long-term Treasury bonds is 6.04%. Assume that the market risk premium is 5%. Assume that the stock, currently trading at $27.05, has a required return of 13%. You will use this required return rate to discount dividends. If you plan to buy the stock, hold it for 3 years, and then sell it for $27.05, what is the most you should pay for it?

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(Top Tutor) Daniel C.
School: Duke University

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