1. A company just paid dividends of $2.75 per share. The company has a constant growth of 5.5%. The risk free rate is 2.5%, beta is 0.90 and market return of 8%. The stock is selling at $75.50. 1. Determine the rate of return on equity. 2. What is the stock price after a year?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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1. A company just paid dividends
of $2.75 per share. The company
has a constant growth of 5.5%.
The risk free rate is 2.5%, beta is
0.90 and market return of 8%. The
stock is selling at $75.50. 1.
Determine the rate of return on
equity. 2. What is the stock price
after a year?
Transcribed Image Text:1. A company just paid dividends of $2.75 per share. The company has a constant growth of 5.5%. The risk free rate is 2.5%, beta is 0.90 and market return of 8%. The stock is selling at $75.50. 1. Determine the rate of return on equity. 2. What is the stock price after a year?
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