Suppose the risk-free interest rate is 3% and the market risk premium is 7%. A Company,...
Suppose the risk-free interest rate is 3% and the market risk premium is 7%. A Company, XYZ, has a beta 1.2. The Dividend per share of $1.1 was paid at the end of the year to investors. The Dividend growth is 6% per year in the next two years and 5% per year for all years after that.
(a) What is the expected return of XYZ stock as per CAPM?
(b) What is the expected price of XYZ stock in two years?
(c) What is the Intrinsic value of XYZ stock?
Homework Answers
Add Answer to:
Suppose the risk-free interest rate is 3% and the market risk
premium is 7%. A Company,...
Suppose the risk-free interest rate is 2% and the market risk premium is 6%. A company,...
Suppose the risk-free interest rate is 2% and the market risk premium is 6%. A company, ABC, has a beta of 1.2. The Dividend per share of $1.1 was just paid to the investors. The dividend growth is 6% per year in the next two years and 5% per year for all years after that. The retention percentage rate is 50%. The stock is fairly priced. (a) Calculate the present value of growth opportunities for ABC. (b) Would this answer...
Consider a company with a beta of 1.6. The risk-free interest rate in the market is...
Consider a company with a beta of 1.6. The risk-free interest rate in the market is 4%, whereas the market risk premium is 6%. The recent dividend was just declared for the company and was $3.00 per share. The required rate of return for the stock is 12%, and the growth rate of dividends is constant at 5%. A.) Using a dividend discount valuation approach, what is the intrinsic value of the stock? B.) If you held the stock for...
6. Assume the risk-free rate is 6% and the market risk premium is 7%. The stock...
6. Assume the risk-free rate is 6% and the market risk premium is 7%. The stock of Physicians Care Network (PCN) has a beta of 1.5. The last dividend paid by PCN (D) was $2 per share. What would PCN's stock value be if the dividend were expected to grow at a constant rate of negative 5%. Choice: $6.00 Choice: $8.84 Choice: $9.50 Choice: $17.60 Assume the risk-free rate is 5% and the market risk premium is 8%. The stock...
The risk-free rate is 1.14% and the market risk premium is 5.45% Astock with a 3...
The risk-free rate is 1.14% and the market risk premium is 5.45% Astock with a 3 of 1.53 just paid a dividend of $2.07 The dividend is expected to grow at 22.46% for three years and then grow at 3.45% forever. What is the value of the stock? Submit Answer format: Currency: Round to: 2 decimal places. The risk-free rate is 2.36% and the market risk premium is 7.05%. A stock with a ß of 1.18 just paid a dividend...
Assume the risk-free rate is 6% and the market risk premium is 6%. The stock of...
Assume the risk-free rate is 6% and the market risk premium is 6%. The stock of Physicians Care Network (PCN) has a beta of 1.5. The last dividend paid by PCN (D0) was $2 per share. What would PCN’s stock value be if the dividend were expected to grow at a constant rate of negative 5%. Choice: $6.00 Choice: $9.50 Choice: $13.45 Choice: $17.60 Assume the risk-free rate is 6% and the market risk premium is 6%. The stock of...
The risk-free rate is 3.96% and the market risk premium is 9.00%. A stock with a...
The risk-free rate is 3.96% and the market risk premium is 9.00%. A stock with a β of 1.19 just paid a dividend of $2.84. The dividend is expected to grow at 20.37% for three years and then grow at 4.84% forever. What is the value of the stock? Submit Answer format: Currency: Round to: 2 decimal places. unanswered not_submitted #3 The risk-free rate is 3.70% and the market risk premium is 7.42%. A stock with a β of 1.32...
The risk-free rate is 2.77% and the market risk premium is 7.64%. A stock with a...
The risk-free rate is 2.77% and the market risk premium is 7.64%. A stock with a β of 1.28 just paid a dividend of $2.96. The dividend is expected to grow at 20.83% for five years and then grow at 4.65% forever. What is the value of the stock? Suppose the risk-free rate is 2.40% and an analyst assumes a market risk premium of 6.68%. Firm A just paid a dividend of $1.12 per share. The analyst estimates the β...
Suppose that the risk-free rate is 3% and that the market risk premium is 8%. What...
Suppose that the risk-free rate is 3% and that the market risk premium is 8%. What is the required return on the market? Round your answer to two decimal places. % What is the required return on a stock with a beta of 1.2? Round your answer to two decimal places. % What is the required return on a stock with a beta of 0.4? Round your answer to two decimal places.
Assume that the risk-free rate is about 2% and the market risk premium is 8%. If...
Assume that the risk-free rate is about 2% and the market risk premium is 8%. If you think Bank of America stock price will rise to $27 per share by the end of the year, at which time it will pay a $1 dividend, and you estimate its beta to be 1.2, what should be the fair price for BOA stock today according CAPM? the stock is currently trading at $24.16, would you buy the stock or not?
20 The risk-free rate is 3.96% and the market risk premium is 9.00%. A stock with...
20 The risk-free rate is 3.96% and the market risk premium is 9.00%. A stock with a β of 1.19 just paid a dividend of $2.84. The dividend is expected to grow at 20.37% for three years and then grow at 4.84% forever. What is the value of the stock? Answer format: Currency: Round to: 2 decimal places. #3 The risk-free rate is 3.70% and the market risk premium is 7.42%. A stock with a β of 1.32 just paid...
6. Assume the risk-free rate is 6% and the market risk premium is 7%. The stock of Physicians Care Network (PCN) has a beta of 1.5. The last dividend paid by PCN (D) was $2 per share. What would PCN's stock value be if the dividend were expected to grow at a constant rate of negative 5%. Choice: $6.00 Choice: $8.84 Choice: $9.50 Choice: $17.60 Assume the risk-free rate is 5% and the market risk premium is 8%. The stock...
The risk-free rate is 1.14% and the market risk premium is 5.45% Astock with a 3 of 1.53 just paid a dividend of $2.07 The dividend is expected to grow at 22.46% for three years and then grow at 3.45% forever. What is the value of the stock? Submit Answer format: Currency: Round to: 2 decimal places. The risk-free rate is 2.36% and the market risk premium is 7.05%. A stock with a ß of 1.18 just paid a dividend...
Most questions answered within 3 hours.
-
Company AAA produces only one product which other manufacturers
purchase as a component for their final...
asked 2 hours ago -
An
item can be appended to an array-based list, provided the lenght is
less than the...
asked 2 hours ago -
Two particles each have a rest mass energy of 30 MeV and are
traveling with a...
asked 4 hours ago -
why
is vectorization a faster alternative to loops?
asked 5 hours ago -
General Matter’s outstanding bond issue has a coupon rate of
11.8%, and it sells at a...
asked 5 hours ago -
Write a one page essay on how important is it to know your basic
accounting knowledge...
asked 5 hours ago -
You are a Senior Civil Engineer posted at the Contracts and
Procurement Division of the Ministry...
asked 5 hours ago -
When using the percentage of completion method, the
company
- recognizes revenues and gross profit each...
asked 5 hours ago -
Is a level production strategy suitable for a pure service
industry, such as professional accounting and...
asked 5 hours ago -
Baker Industries’ net income is $23000, its interest expense is
$4000, and its tax rate is...
asked 5 hours ago -
a) A proton moves at 500 m/s in a 2 T magnetic field. What is
the...
asked 5 hours ago -
Anderson Systems is considering a project that has the following
cash flow and WACC data. What...
asked 6 hours ago