15. Suppose that Skecher's stock paid a dividend of $0.80 last year, and the divided is expected to grow by a constant rate of 6% per year. Skecher's beta is 1.24, the current risk-free rate is 2% and the market risk premium is 7%. What is the intrinsic value (current price) of this stock?

15. Suppose that Skecher's stock paid a dividend of $0.80 last year, and the divided is expected to grow by a constant rate of 6% per year. Skecher's beta is 1.24, the current risk-free rate is 2% and the market risk premium is 7%. What is the intrinsic value (current price) of this stock?

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

Section: Chapter Questions

Problem 1PS

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Question

15. Suppose that Skecher's stock paid a dividend of $0.80 last year, and the divided is
expected to grow by a constant rate of 6% per year. Skecher's beta is 1.24, the current
risk-free rate is 2% and the market risk premium is 7%. What is the intrinsic value
(current price) of this stock?

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