Abbott Laboratories (ABT) engages in the discovery, development, manufacture, an

Question

Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of a line of health care and pharmaceutical products. Below you will find selected information from Value Line. Use the Value Line estimated 2012 figures as the actual year-end figures for the company. The beta reported was .9 and the risk-free rate was 5.93 percent. Assume a market risk premium of 5 percent.

What is the sustainable growth rate and required return for Abbott Laboratories? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)

Using these values, calculate the 2013 share price of Abbott Laboratories stock according to the constant dividend growth model. (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of a line of health care and pharmaceutical products. Below you will find selected information from Value Line. Use the Value Line estimated 2012 figures as the actual year-end figures for the company. The beta reported was .9 and the risk-free rate was 5.93 percent. Assume a market risk premium of 5 percent.

Explanation / Answer

1)

required return = rf + beta * rm

= 5.93% +0.9 * 5%

= 10.43%

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