Constant growth valuation-constant growth rate

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Constant Growth Rate, g

A stock is trading at $90 per share. The stock is expected to have a year-end dividend of $3 per share (D₁ = $3), and it is expected to grow at some constant rate g throughout time. The stock's required rate of return is 15% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of g? Round the answer to three decimal places.

Constant Growth Valuation

Crisp Cookware's common stock is expected to pay a dividend of $2.5 a share at the end of this year (D₁ = $2.50); its beta is 1.15; the risk-free rate is 3.5%; and the market risk premium is 4%. The dividend is expected to grow at some constant rate g, and the stock currently sells for $43 a share. Assuming the market is in equilibrium, what does the market believe will be the stock's price at the end of 3 years (i.e., what is )? Do not round intermediate steps. Round your answer to the nearest cent.

Reference no: EM131213166

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