Assuming market is in equilibrium

Assignment Help Financial Management

Reference no: EM131879216

You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $2.00 a share at the end of the year (D1 = $2.00) and has a beta of 0.9. The risk-free rate is 4.9%, and the market risk premium is 5.0%. Justus currently sells for $45.00 a share, and its dividend is expected to grow at some constant rate, g. Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is ?) Round your answer to two decimal places. Do not round your intermediate calculations.

Reference no: EM131879216

Questions Cloud

Flowering plant reproductive organs : Angiosperms, or flowering plants, are vascular, bisexual plants. Both the male and female reproductive organs are found in a single flower.

What is the stock expected price one years from today : If its required return is 12%, what is the stock's expected price 1 years from today?

Describes the negotiation tactic style or strategy would use : Describes the negotiation tactic, style, or strategy you would use to gain full support if each stakeholder does not fully support your change.

What are some challenges teams or groups will experience : What are some challenges teams or groups will experience if there are signs of groupthink? What strategies could be used to eliminate groupthink if it exists

Assuming market is in equilibrium : Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years?

List two genetic disorders : List two genetic disorders where males are affected more often than females, and two genetic disorders where males and females are affected equally.

What is the monthly payment required by both mortgages : What is the monthly payment required by both mortgages? What is the total amount paid for the 30 year and 15 year mortgages?

What arguments would you use to make the case for the policy : What arguments would you use to make the case for the policy? What argument(s) would your opponents make?

Chain rule for differentiation : What are the similarities and differences between the Chain Rule for differentiation of x^n versus the Power Rule for differentiation?

User Account

All Pages