Gurley Enterprises' stock has a required return of 15. The company, which plans to pay a dividend of \$2.
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# 6.    Gurley Enterprises' stock has a required return of 15.40%. The company, which plans to pay a dividend of

\$2.85 per share in 2019, anticipates that its future dividends will increase at an annual rate consistent with that experienced over the 2012-2018 period, when the following dividends were paid:

Year

Div per Shr

2012

\$1.65

2013

\$1.95

2014

\$2.20

2015

\$2.33

2016

\$2.44

2017

\$2.60

2018

\$2.65

1.    If the risk-free rate is 5%, what is the risk premium on Gurley's stock?

2.    Using the constant-growth model, estimate the value of Gurley's stock.

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