Giant Enterprises' stock has a required return of 15.1%. The company, which plans to pay a dividend of $1.52 per share in the coming year, anticipates that its future dividends will increase at an annual rate consistent with that experienced over 2013-2019 period, when the following dividends were paid:

a.If the risk-free rate is 7%,what is the risk premium on Giant's stock? round to one decimal place

b.Using the constant-growth model, estimate the value of Giant's stock.

(Hint:

Round the computed dividend growth rate to the nearest whole percent.)

c.Explain what effect, if any, a decrease in the risk premium would have on the value of Giant's stock.

Year 2019 2018 2017 Dividend per Share $1.46 $1.41 $1.35 $1.30 $1.25 $1.20 $1.16 2016 2015 2014 2013