Rene would like to explore a career that would allow her to work with customers or clients. Which two of the following careers a
re the best options for her?
2 answers:
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Answer:
44.35
Explanation:
The stock will increase the grow rate of the company. We need to solve this.
The grow rate will be determinate using the Gordon dividend grow model
we clear for g
to find the return we use CAPM
risk free 0.032
market rate
premium market = (market rate - risk free) = 0.045
beta(non diversifiable risk) = 0.9
Ke 0.07250
this will be the return we use in the formula for grow
g = 0.0725 - 1.5/40 = 0.03500
At this rate our dividends will grow and also our share price
the stock in 3 years will be the current price capitalized with the grow rate
Stock 40.00
time 3.00
rate 0.035
Futue value in 3 years = 44.35