Constant growth you are considering an investment in Keller Corps stock , which is expected to pay a dividend of$2.00 a share at the end of the year D1=$2.00 and has a bets of 0.9. The risk-free rate is 5.6% and the market risk premium is 6%. keller currently sells for $25.00 a share, and its dividend is expected to grow at some constant rate g. Assuming the market equllibrim what does the market believe will be the stock price at the end of 3 years? what is P3?

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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Constant growth you are considering an investment in Keller Corps stock , which is expected to pay a dividend of$2.00 a share at the end of the year D1=$2.00 and has a bets of 0.9. The risk-free rate is 5.6% and the market risk premium is 6%. keller currently sells for $25.00 a share, and its dividend is expected to grow at some constant rate g. Assuming the market equllibrim what does the market believe will be the stock price at the end of 3 years? what is P3?

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