Answer:
$16.93
Explanation:
Current stock price = dividend ( 1 + growth rate) / required return - growth rate
$1.4(1.04) / 0.126 - 0.04 = $16.93
Answer:
The expected excess return will be 11.4%
Explanation:
The S&P 500's excess return is the market return (rM). Using the CAPM model or the SML approach, we can calculate the required/expected rate of return on the stock we are investing in.
The expected rate of return is,
r = rRF + β * (rM - rRF)
Thus, return on the invested stock will be:
r = 0.03 + 1.2 * (0.1 - 0.03)
r = 0.114 or 11.4%
Answer:
Cash borrowed = $120,000
Interest on promissory note = 10%
Explanation:
