The Isberg Company just paid a dividend of $0.75 per share, and that dividend is expected...

Question

Question

The Isberg Company just paid a dividend of $0.75 per share, and that dividend is expected to grow at a constant rate of 5.50%

Answer 1

Answer #1

rate positively ..

Price today = Divided next year/(required rate - growth rate)


required rate= Risk free rate + market risk premium*beta

		4%+5%*1.65
		12.25%


Expected dividend next year =	0.79125
0.75*105.5%


Growth rate =		5.50%

price today =
0.79125/(12.25%-5.5%)	11.72

ans=			$ 11.72

Answer 2

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