Question
Table below to be used with problem #6 below: Variable Value Explanation Dividend growth estimate 5%, 3% 5% for 2 years (annual estimate) and 3%
Table below to be used with problem #6 below: Variable Value Explanation Dividend growth estimate 5%, 3% 5% for 2 years (annual estimate) and 3% per year indefinitely thereafter. Current dividend $1.00 Dividend declared on 4/19/06 to be paid to shareholders on record as of 4/28/06 Beta coefficient 2.0 Current estimate Expected market return 12.0% Historical arithmetic average (annual) return on the S&P 500 Index RFR 5.0% 10 year Treasury bond yield 6. (10 pts) Using the table above, what is the maximum that an investor should be willing to pay for the share of common stock today?
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