FIBK paid an annual dividend of $1.33 this past year, and has announced that the dividend...
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FIBK paid an annual dividend of $1.33 this past year, and has announced that the dividend for the current year will be $1.36. The stock has a Beta of 1.16, the risk-free rate is 2.5%, and the equity risk premium is estimated at 5.5%. What is the required rate of return for FIBK stock, as calculated using the CAPM? Assume that after this year the dividend rises by 5% for two years, by 4% for one year, and by 3.5% for one year, before settling at a long-term growth rate of 3%. What is the value of FIBK stock? FIBK paid an annual dividend of $1.33 this past year, and has announced that the dividend for the current year will be $1.36. The stock has a Beta of 1.16, the risk-free rate is 2.5%, and the equity risk premium is estimated at 5.5%. What is the required rate of return for FIBK stock, as calculated using the CAPM? Assume that after this year the dividend rises by 5% for two years, by 4% for one year, and by 3.5% for one year, before settling at a long-term growth rate of 3%. What is the value of FIBK stock?
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Lets break this down step by step 1 Calculate the Required Rate of Return k using the CAPM k Rf beta ... View the full answer
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Posted Date:
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