Jersey Jewel Mining has a beta coefficient of 1.5. Currently the risk-free rate is 2 percent and the anticipated return on the market is 6 percent. JJM pays a $5.30 dividend that is growing at 5 percent annually. Do not round intermediate calculations.

1. What is the required return for JJM? Round your answer to two decimal places.

%

2. Given the required return, what is the value of the stock? Round your answer to the nearest cent.

$

3. If the stock is selling for $211, what should you do?

The stock -Select-isis notItem 3 overvalued and -Select-shouldshould notItem 4 be purchased.

4. If the beta coefficient declines to 1.4, what is the new value of the stock? Round your answer to the nearest cent.

$

5. If the price remains $211, what course of action should you take given the valuation in d?

The stock is -Select-overvaluedundervaluedItem 6 and -Select-shouldshould notItem 7 be purchased.

Problem 11 05 Serwv Www Maing her abile content of 35. City the 18 e 12 percent and the articipated worn on the market le 6 ore Ders 55.38 chided that is growing a 5 percent treaty Do not und internation a. What is the required return for HIM? Round you are to be decimal places 5. Glver the required return, what the value of the stock Hound your answer to the nearest cent c. that it willing for that would you do? The Shtevalot and Selector purchased a betection des What value of the ind yet anner to the eart. kerele 1211. that course of action would take on the valuation The w ad be purchase Check My World 18 Weite the C Work Problem 11-05 Jersey Jewel Mining has a beta coefficient of 1.5. Currently the risk-free rate is 2 percent and the antidpated return on the market is 6 percent. JJM pays a $5.30 dividend that is growing at 5 percent annually. Do not round intermediate calculations a. What is the required return for JM? Round your answer to two decimal places. 8 96 b. Given the required return, what is the value of the stock? Round your answer to the nearest cent. $ 139.125 c. If the stock is selling for $211, what should you do? The stock is overvalued and should not M be purchased. d. If the beta coefficient dedines to 1.4, what is the new value of the stock? Round your answer to the nearest cent. $ 4.091911 e. If the price remains $211, what course of action should you take given the valuation in d? The stock is undervalued and should be purchased. Bile Feedback