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The common shares of Microsoft, which are currently trading at $12.50, paid dividend of $1.50 per share during the past year. Investment analysts have informed
The common shares of Microsoft, which are currently trading at $12.50, paid dividend of $1.50 per share during the past year. Investment analysts have informed you that the historical growth rate for its common share dividends of 2% is expected to continue for the foreseeable future, that the firm's beta is 1.7, and that reasonable estimates for the risk-free rate of return and the expected market return are 3% and 9%, respectively. Alternatively, the common shares of TikTok have a current market aprice of $10 per share and investment analysts have informed you that the share price is expected to be $10.50 in 1 year, that the shares are expected to pay a dividend of $1 per share over the next year, and that their beta is 0.75. Should you invest in the common share of MicroSoft or the common shares of TikTok? Explain and support your answer with calculations. 1:04 p.m
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