5. The XYZ Company just paid a dividend of D0 = $1.0 per share, and that dividend is expected to grow at a constant rate
5. The XYZ Company just paid a dividend of D0 = $1.0 per share, and that dividend is expected to grow at a constant rate of 3.00% for the first 6 years and then 2% per year from year 7 till forever. The company's beta is 1.5, the expected market return is 7%, and the nominal risk-free rate is 4.00%.
(a) What is the company's current stock price?
(b) What is expected stock price in 10 years?
(c) What is expected stock price in 20 years?
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Authors: Judith J. Baker, R.W. Baker
4th Edition
1284029867, 978-1284029864
