card advertising eyelash exGlam Eyelashes Black andxCengage CSecure https://ng.c

Question

card advertising eyelash exGlam Eyelashes Black andxCengage CSecure https://ng.cengage.com/static/nb/ui/evo/index.htmi7elSBN-97813373951208id-341549935&snapshotid 8815858 Mindap-Cengage Learni (23) Relaxing Music & *x pps * Bookmarks D course Materials M McGraw-Hil Connect M McGraw-Hill Connect Homework , how to create pivot. MINDTAP Feum Cengage a search this course 08: End-of-Chapter Problems- Basic Stock Valuation Assignment: Ch 08: End-of-Chapter Problems - Basic Stock Valuation Assyment Score: 3750% Save Submit Assignment for Grading Questions Check My Work (t remaining) 2 3. O Nonconstant Growth Valuation OAcompany currently pays a dividend of $2.8 per share (Do-$2.8). It is estimated that the company's d idend wilgrow at a rate of 17% per year for the next 2 years, and then at a constant rate of 6% thereafter. The company's stock has a beta of 1.8, the risk-free rate is 6.5%, and the market risk premium is 2s%, what is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent Check My Work (s remaining)

Explanation / Answer

Required return=risk free+beta*market risk premium=6.5%+1.8*2.5%=11%
Share price=2.8*1.17/1.11+2.8*1.17^2/1.11^2+(2.8*1.17^2*1.06/(11%-6%))/1.11^2=72.013

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.