Exxon has a distribution for its long-term growth rate as 5% (probability 50%), 6% (probability 30%), or 11% (probability 20%). Also, its dividend for this year has the following probability distribution: 20% $5, 50% $8, and 30% $10. What should you pay for Exxon stock if your required rate of return is 20% ?

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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Exxon has a distribution for its long-term growth rate as 5% (probability 50%), 6% (probability 30%), or 11% (probability 20%). Also, its dividend for this year has the following probability distribution: 20% $5, 50% $8, and 30% $10. What should you pay for Exxon stock if your required rate of return is 20% ?

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