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A firm is expected to pay an annual dividend of $1.10 next year. After next year...

A firm is expected to pay an annual dividend of $1.10 next year. After next year the firm’s dividends will grow at a steady state rate of 4% per year. You are trying to value the stock and Value Line lists a stock beta of 1.85 while Yahoo is reporting a beta of 1.77. The stock is currently priced at $14.30. If E(RM) – Rf = 5.2% and the risk free rate is 3.3% the stock is ____________________ if you use the Value Line beta and is

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Answer #1
required rate using Value Line beta = 12.92%
3.3%+5.2%*1.85
Price today = $                        12.33
1.1/(12.92%-4%)
Answer = $                        12.33
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