rate of return = risk free + beta ( market risk premium)
r = 4 % + 1.15 (5.50 %) = 4% + 6.325 % = 10.325%
r = 10.325%
now, the stock price
P0 = D1 / (r - g )
price = 1.25 / (10.325% - 5%) = 1.25/ 5.325 = $ 23.47
oxxon's current stock price is $ 23.47 .
Oxxon Furniture is expected to pay a dividend of D1 = $1.25 per share at the...
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