PS #2 Type A: Brite Events has been growing at a rate of 204 per year, and you expect this growth rate in earnings and dividends to continue for another 4 years. The Last dividend paid was s2, and if the steady (i.e., constant) growth rate after 4 years is 5, what should the stock price be today? Assume that the stock has a beta of 2.0, Treasury bills yield 34, and the market risk premium is 68.

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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PS #2 Type A: Brite Events has been growing at a rate of 20% per year, and you expect this growth rate in earnings and dividends to continue for another 4 years. The
last dividend paid was $2, and if the steady (i.e., constant) growth rate after 4 years is 58, what should the stock price be today? Assume that the stock has a beta
of 2.0, Treasury bills yield 3%, and the market risk premium is 6%.
Transcribed Image Text:PS #2 Type A: Brite Events has been growing at a rate of 20% per year, and you expect this growth rate in earnings and dividends to continue for another 4 years. The last dividend paid was $2, and if the steady (i.e., constant) growth rate after 4 years is 58, what should the stock price be today? Assume that the stock has a beta of 2.0, Treasury bills yield 3%, and the market risk premium is 6%.
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Risk free rate 3%
Market risk premium 6%
Beta 2
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