Buspru Inc. paid dividends per share of 2,59 in 2019, and dividends are expected to grow...
Buspru Inc. paid dividends per share of 2,59 in 2019, and dividends are expected to grow 1,87% per year forever. The stock has a beta of 0.85, and the Treasury bond rate is 2%. Use a risk premium of 5%.
a) What is the value per share 31 December 2019?
b) The stock was trading for $70 per share. What would the growth rate in dividends have to be to justify this price?
c) What issues, if any, does the growth level estimated in b) raise?
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