Question

Part 1: The risk-free rate is 3.53% and the market risk premium is 6.15%. A stock with a β of 0.88 just paid a dividend of $2.36. The dividend is expected to grow at 21.73% for three years and then grow at 4.48% forever. What is the value of the stock?

Part 2: The risk-free rate is 3.35% and the market risk premium is 9.06%. A stock with a β of 0.98 just paid a dividend of $2.28. The dividend is expected to grow at 23.72% for five years and then grow at 3.88% forever. What is the value of the stock?

Round to 2 decimal places please

Answer 1