Question
Analysts believe that the beta for Allied common stock is 2.0 and the next expected dividend is $10.00. The risk free rate is 5% and
Analysts believe that the beta for Allied common stock is 2.0 and the next expected dividend is $10.00. The risk free rate is 5% and the market risk premium is 5%.
a) What is the Price of the Stock Today if dividends are expected to remain unchanged?
b) What is the Price of the Stock Today if dividends are expected to constantly increase by 5%?
c) What is the Price of the Stock Today if dividends are expected to constantly decrease by 5%?
d) What is the Price of the Stock 1000 Years from Today if dividends are expected to constantly decrease by 5%?
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