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Answer 13 and 14 with work thanks Rollins Industries expects to pay a $3.00 per share dividend on its common stock at the end of

Answer 13 and 14 with work thanks
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Rollins Industries expects to pay a $3.00 per share dividend on its common stock at the end of the year. The dividend is expected to grow 25% a year until t=3 after which time the dividend is expected to grow at a constant rate of 5% a year. The stock's beta is 1.2, the risk free rate of interest (Rf) is 6% and the rate of return on the market (Rm) is 11%. Use the CAPM equation to find the equity cost of capital (i.e., required rate of return: Rs =Rf+(RmRf) beta ). 13. What is the company's intrinsic current stock price, P0 ? a. $60.00 b. $55.75 c. $59.05 d. $45.60 e. $70.00 C 14. The dividend yield and capital gains yield at the end of year 1 are: a. 5.08%;6.92% b. 6.00%;6.00% c. 6.12%;5.88% d. 5.80%;6.90% e. 12%;10%

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