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12.4. Assume the risk-free rate is 6 percent and the market risk premium is 6...

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Accounting

12.4. Assume the risk-free rate is 6 percent and the market risk premium is 6 percent. The stock of Clinicians Care Alliance (PCA) has a beta of 1.5. The last dividend paid by PCA (D0) was $2 per share.
a, What would PCA's stock value be if the dividend were expected to grow at a constant:
-5 percent?
0 percent?
5 percent?
10 percent?
b. What would be the stock value if the growth rate were 10 percent but PCA's beta fell to:
1.0?
0.5?
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