126 127 128 PROBLEM 4 129 130 Given the following information, calculate the price of the common stock 131 using the constant growth in dividends model 132 133 Risk-tree rate (RF) - 3.5% 134 Market Rate of Return (R) 10.5% 135 Beta of the Stock = 1.2 136 Dividendest paid (DO) - $3.00/per share 137 Constant dividend growth rate -7% per year 138 Hint: First calculate the required rate of return for the stock using CAPM 139 Use this to calculate the price of the stock using the constant growth in dividends modelll 3.50% 10.50% 1.2 $3.00 140 143 PROBLEMS 144 Settlement Date 145 Maturity Date 146 Coupon Rate 147 Required Retum (YTM) 143 Face Value 149 Frequency 1.50 Basis 151 152 Given the Yield to Maturity (YTMcalculate the price of the bond using PRICE function in Excel 153 4/16/20 4/15/35 6.50% 7.50% 1000 Semi-Annual Interest Payment 2 0 155 156 157 158