Determine the rate of return on equity

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Reference no: EM133638017

Question

A company just paid dividends of $2.75 per share. The company has a constant growth of 5.5%. The risk-free rate is 2.5%, beta is 0.90 and market return of 8%. The stock is selling at $75.50.

1. Determine the rate of return on equity.

2. What is the stock price after a year?

Reference no: EM133638017

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