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Arisa [49]
2 years ago
8

Schnusenberg Corporation just paid a dividend of D0 = $0.75 per share, and that dividend is expected to grow at a constant rate

of 6.50% per year in the future. The company's beta is 0.75, the required return on the market is 10.50%, and the risk-free rate is 4.50%. What is the company's current stock price? Do not round intermediate calculations.
Business
1 answer:
valkas [14]2 years ago
5 0

Answer:

$9.74

D0 $0.75

b 1.70

rRF 4.5%

rM 10.5%

g 6.5%

D1 = D0(1 + g) =$0.7988

rS = rRF + b(rM - RRF) =14.7%

P0 = D1/(rS - g)=$9.7

Explanation:

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