Your company has the following expected dividends over the next 6 years: $2.00, $2.40 $3.60, $4.20, and $4.41. Note that starting in Year 5, dividends will begin to grow at a constant. long-run sustainable growth rate of 5 percent (D6 $4.20 x 1.05 $4.41, etc.). Further, the risk-free rate is 4.0 percent, the Risk Premium on the Market is 6.0 percent, and the company has a beta of 1.30. Calculate the current price of this stock at Year 0. O $43.75 O$40.27 $52.72 $47.84 $37.29 B
Your company has the following expected dividends over the next 6 years: $2.00, $2.40 $3.60, $4.20, and $4.41. Note that starting in Year 5, dividends will begin to grow at a constant. long-run sustainable growth rate of 5 percent (D6 $4.20 x 1.05 $4.41, etc.). Further, the risk-free rate is 4.0 percent, the Risk Premium on the Market is 6.0 percent, and the company has a beta of 1.30. Calculate the current price of this stock at Year 0. O $43.75 O$40.27 $52.72 $47.84 $37.29 B
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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Transcribed Image Text:Your company has the following expected dividends over the next 6 years: $2.00, $2.40, $3.20,
$3.60, $4.20, and $4.41. Note that starting in Year 5, dividends will begin to grow at a constant,
long-run sustainable growth rate of 5 percent (D6 = $4.20 x 1.05= $4.41, etc.). Further, the risk-free
rate is 4.0 percent, the Risk Premium on the Market is 6.0 percent, and the company has a beta of
1.30.
Calculate the current price of this stock at Year 0.
O $43.75
$40.27
$52.72
O $47.84
O $37.29
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