Question
1. The XYZ company is expected to pay a dividend of $2.00 per share at the end of the year, and that dividend is expected
1. The XYZ company is expected to pay a dividend of $2.00 per share at the end of the year, and that dividend is expected to grow at a constant rate of 3.00% per year in the future. The companys beta is 1.1, the market risk premium is 6.0%, and the nominal risk-free rate is 4.00%.
(1) What is the fundamental price of the stock?
(2) What is the stock's expected return ?
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Intermediate Financial Management
Authors: Eugene F. Brigham, Louis C. Gapenski
4th Edition
0030754828, 978-0030754821
