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1.FIN307 stock has the following probability distribution of expected prices one year from now: State Probability Price 1.25$50 2.40$60 3.35$70 If you require a risk

1.FIN307 stock has the following probability distribution of expected prices one year from now:

StateProbabilityPrice

1.25$50

2.40$60

3.35$70

If you require a risk premium of 5% and Rf is 4%.What is the price you are willing to pay today for FIN307? Assuming the stock will pay a dividend of $4 per share.

What I got (.25 * 50 + .4 * 60 + .35 * 70 + 4) * 1.09 = $70.49

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Financial Management For Decision Makers

Authors: Peter Atrill, Paul Hurley

2nd Canadian Edition

138011605, 978-0138011604

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