Question
A stock paid a $1 dividend last year. The risk- free rate is 5 percent; the expected return onthe market is 12 percent; and the
A stock paid a $1 dividend last year. The risk- free rate is 5 percent; the expected return onthe market is 12 percent; and the stock's betais 1.5. If dividends are expected to grow at a 5 percent rate forever, what is the value of the stock?
a.$10.00
b.$15.25
c.$21.50
d.$25.75
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Financial and Managerial Accounting the basis for business decisions
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
16th edition
0077664078, 978-0077664077, 78111048, 978-0078111044
