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Find what should be the market price of the stock

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The risk-free rate of return is 3 percent, and the expected return on the market is 6.8 percent. Stock A has a beta coefficient of 1.4, an earnings and dividend growth rate of 5 percent, and a current dividend of $1.80 a share. Do not round intermediate calculations. Round your answers to the nearest cent.

Problem 1: What should be the market price of the stock?

Problem 2: If the expected return on the market rises to 12.6 percent and the other variables remain constant, what will be the value of the stock?

Reference no: EM132976675

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