The Yempy Corp. is recently paid a dividend of$2. The dividends are expected to grow at 20%for next 4 years due to technological advancedand thereafter, the growth rate settles down to2% for ever.The risk-free rate is 2.2% and the market riskpremium is 6%. If the beta of the stock is 1.3,what must be the current selling price of thecompany's stock?Calculate the current selling price of the stock.The current selling price of the stock is $36.72The current selling price of the stock is $35.07The current selling price of the stock is $25.08O The current selling price of the stock is $31.05

Risk free rate = 2.2%Beta = 1.3Marker risk premium = 6%Cost of equity= Risk free rate + (Beta*Market…

Answered: The current selling price of the stock…

The current selling price of the stock is $36.72 The current selling price of the stock is $35.07 The current selling price of the stock is $25.08 The current selling price of the stock is $31.05

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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