8-5 Problem - (8­5 A company currently pays a dividend of...

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Unformatted text preview: (8­5) A company currently pays a dividend of $2 per share, D=$2. It is estimated that the company’s dividend will grow at a rate 20% per year for the next 2 years, then the dividend will grow at a constant rate of 7% thereafter. The company’s stock has a beta equal to 1.2, the risk­free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock’s current price? $50.50 ...
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This note was uploaded on 10/05/2010 for the course FINANCE FI 515 taught by Professor Dremerson during the Summer '10 term at Keller Graduate School of Management.

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