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QUESTION THREE (1) What is the general formula for valuing any stock, irrespective of its dividend pattern? 2) What is the re
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Answer #1

1) General Formula is Computing the,

Present value of expected future cash Dividends arising from the stock

2) CAPM return = Risk free return + [Beta*(Market return - Risk free return)]

Market risk premium = (Market return - Risk free return)

Required return on stock = 8% + [1.3 * (7%)]

Required return on stock = 17.10%

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