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12.4 Assume the risk-free rate is 6 percent and the market risk premium is 6 percent. The stock of Physicians Care Network (PCN) has a
12.4 Assume the risk-free rate is 6 percent and the market risk premium is 6 percent. The stock of Physicians Care Network (PCN) has a beta of 1.5. The last dividend paid by PCN (D0) was $2 per share. a. What would PCNs stock value be if the dividend was expected to grow at a constant:
5 percent?
0 percent?
5 percent?
10 percent?
b. What would be the stock value if the growth rate is 10 percent, but PCNs beta falls to
1.0?
0.5?
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