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A company currently pays a dividend of $1.75 per share (D0 = $1.75). It is estimated...

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Finance

A company currently pays a dividend of $1.75 per share(D0 = $1.75). It is estimated that the company'sdividend will grow at a rate of 23% per year for the next 2 years,and then at a constant rate of 5% thereafter. The company's stockhas a beta of 1.6, the risk-free rate is 6.5%, and the market riskpremium is 3%. What is your estimate of the stock's current price?Do not round intermediate calculations. Round your answer to thenearest cent

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Step1 Calculation of the Required Rate of Return Ke As per CAPM Approach the Required Rate of Return is calculated as follows Required Rate of Return Riskfree Rate Beta x Market Risk Premium 650 160 x 300 650 480 1130 Step2    See Answer
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