Problema company currently pays a dividend of 3 per share, Ask an Expert

Accounting

Problem:

A company currently pays a dividend of $3 per share, D₀ = 3. It is estimated that the company's dividend will grow at a rate of 17% percent per year for the next 2 years, then the dividend will grow at a constant rate of 6% thereafter. The company's stock has a beta equal to 0.9, the risk-free rate is 3 percent, and the market risk premium is 4 percent.

Required:

Question: What is your estimate is the stock's current price?

Note: Provide support for your underlying principle.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170571

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