Question
The Peyton Company is expected to pay a dividend (D1) of $1.39 at the end of next year. The dividend is expected to grow at
The Peyton Company is expected to pay a dividend (D1) of $1.39 at the end of next year. The dividend is expected to grow at a constant rate (g) of 4.4% in the future. The company's beta is 1.4, the market risk premium is 6.2%, and the risk-free rate is 3.7%. What is the company's current stock price P0? (HINT: use the CAPM to find rs, then use rs in the dividend growth model to find P0.) Enter your answer with 2 decimal places (dollars and cents).
If the next dividend paid (D1) is expected to be $3.29 and the stock's price (P0) is $22.04, what is the stock's expected dividend yield for the coming year? Enter as a decimal with 4 decimals of precision.
If the next dividend to be paid D1 is $1.24, the constant dividend growth rate g is 3.4%, and the current price P0 is $18, what is the stock's expected total return (rs) for the coming year? Enter as a decimal with four places of precision.
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