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Dividend Growth Model & CAPM A companys stock has the following attributes: Current Market price of $25.00 Current annual dividend of $1.50 Constant dividend growth

Dividend Growth Model & CAPM

A companys stock has the following attributes:

  • Current Market price of $25.00
  • Current annual dividend of $1.50
  • Constant dividend growth rate of 4%
  • A beta of 1.14

The risk-free rate is currently 3.4% and the market risk premium is 6.0%. If the risk-free rate suddenly jumps to 4.25% what happens to this companys stock price (Give the price to 2 decimal places)?

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