Lisa Simpson is an security analyst at Left-handed Brothers Securities and has develped the following...
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Lisa Simpson is an security analyst at Left-handed Brothers Securities and has develped the following estimates for Doh! Doughnuts common stock which is currently selling for $30 per share. The risk-free rate is 2.5%, the market risk premium is 8.5%, and Doh!s stock has a beta of 1.2 with a current dividend of $1.50 that has an expected constant growth rate of 7%. What is Lisas valuation of Doh! Doughnuts stock?
CCC Corp has a beta of 1.5 and is currently in equilibrium. The required rate of return on the stock is 12.00% versus a required return on an average stock of 10.00%. Now the required return on an average stock increases by 40.0% (not percentage points). Neither betas nor the risk-free rate change. What would CCC's new required return be? Do not round your intermediate calculations.
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