Homework Answers
| 1] | Dividend growth rate = (2/1.75)^(1/5)-1 = | 2.71% |
| 2] | Required return on the stock per CAPM = 3.0%+3*7.5% = | 25.50% |
| 3] | Price of the stock per constant dividend growth model = 2*1.0271/(0.2550-0.0271) = | $ 9.01 |
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