What would the pcn stock value be?

label Mathematics
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schedule 1 Day
account_balance_wallet $5

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

               -5%?

               0%?

               5%?

               10%?

Nov 18th, 2015

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

First we have to calulate the cost of equity (Ke)

Ke = Risk free rate+Beta*(market risk premium)

=6%+1.5*6%

=15%


Please let me know if you need any clarification. I'm always happy to answer your questions.
Nov 18th, 2015

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