Question
27 - What is the value of a common stock if: please provide formula and answer a. the firm's earnings and dividends are growing annually
27- What is the value of a common stock if: please provide formula and answer
a. the firm's earnings and dividends are growing annually at 4 percent, the current dividend is $1.32, and investors require a 8 percent return on investments in common stock?
b. What is the value of this stock if you add risk to the analysis and the firm's beta coefficient is 0.8, the risk-free rate is 1.5 percent, and the return on the market is 8.5 percent?
c. If the price of the stock is $35, what is the rate of return offered by the stock? Should the investor acquire this stock?
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