Question
You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $1.50 a share at the end of the
You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $1.50 a share at the end of the year (D1 = $1.50) and has a beta of 0.9. The risk-free rate is 3.2%, and the market risk premium is 4.5%. Justus currently sells for $36.00 a share, and its dividend is expected to grow at some constant rate, g. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.
Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is ?) Round your answer to two decimal places. Do not round your intermediate calculations.
*PLEASE SHOW FORMULAS USED IN EXCEL SHEET*
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Finance And Economics Discussion Series 401 K Matching Contributions In Company Stock Costs And Benefits For Firms And Workers
Authors: United States Federal Reserve Board, Jeffrey R. Brown
1st Edition
1288713118, 9781288713110
