Assume the risk-free rate is 6 percent and the market risk premium is 6 percent the stock of Physicians Care Network has a beta of 1.5. The last dividend paid by PCN (Do) was $2 per share.
a). what would pcn stock value be if the dividend was expected to grow as constant
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First we have to calulate the cost of equity (Ke)
Ke = Risk free rate+Beta*(market risk premium)
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