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The risk-free rate is 1.58% and the market risk premium is 9.51%. A stock with a...

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Finance

The risk-free rate is 1.58% and the market risk premium is9.51%. A stock with a ? of 1.17 just paid a dividend of $2.65. Thedividend is expected to grow at 21.07% for three years and thengrow at 4.98% forever. What is the value of the stock?

Round to 2 decimal places.

Answer & Explanation Solved by verified expert
4.2 Ratings (469 Votes)
Step 1 Calculation of cost of equity using Capital Asset Pricing Model Cost of Equity Ke Rf b Rm Rf Where Rf Risk free return 158 b Beta 117 Rm Expected    See Answer
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The risk-free rate is 1.58% and the market risk premium is9.51%. A stock with a ? of 1.17 just paid a dividend of $2.65. Thedividend is expected to grow at 21.07% for three years and thengrow at 4.98% forever. What is the value of the stock?Round to 2 decimal places.

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