09 Case model - 09 Case model 3/22/2010 7:10 2/17/2006...

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09 Case model 3/22/2010 7:10 2/17/2006 Chapter 9. Stocks and Their Valuation PART C Beta 1.2 7% 12% 13.0% PART D $2.00 g 6% $2.12 $2.25 $2.38 $30.29 (3) What is the stock’s expected value one year from now? $32.10 Dividend yield 7.00% Cap. gains yield 6.00% Total return 13.00% PART E Now assume that the stock is currently selling at $30.29. What is its expected rate of return? $30.29 $2.12 g 6% 13.00% This spreadsheet model is designed to be used in conjunction with the chapter's integrated case and the related PowerPoint slide presentation. Assume that Bon Temps has a beta coefficient of 1.2, that the risk-free rate (the yield on T-bonds) is 7%, and that the required rate of return on the market is 12%. What is Bon Temps required rate of return? r RF r M r s = Assume that Bon Temps is a constant growth company whose last dividend (D 0 , which was paid yesterday) was $2.00 and whose dividend is expected to grow indefinitely at a 6% rate. (1) What is the firm's expected dividend stream over the next 3 years? (2) What is its current stock price?
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09 Case model - 09 Case model 3/22/2010 7:10 2/17/2006...

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