Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are considering an investment in Justus Corporation's stock, which is expected to pay a cividend of $1.50a share at the end of the year

image text in transcribed
You are considering an investment in Justus Corporation's stock, which is expected to pay a cividend of $1.50a share at the end of the year (Di=$1.50) and has a beta of 0.9. The riskifree rate is 4.3%, and the market risk premum is 4%. Justus currently sells for $45.00 a share, and its dividend is expected to grow at some constant rate, 9 . Assuming the mankt is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is F3 ?) Do not round intermediate calculations. Round your answer to the nearest cent

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Valuation Workbook

Authors: Tim Koller, Marc Goedhart, David Wessels, Jeffrey P. Lessard, McKinsey & Company

4th Edition

0471702161, 978-0471702160

More Books

Students also viewed these Finance questions