The estimated price of the stock

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1. A mature company’s stock is trading at $107.85 and it will pay a dividend next year of $3.22 per share. Analysts believe that the stock will grow at 3.5% annually forever. If the market risk premium is calculated at 7.27% and the risk-free rate is at 3.45%, what is the stock’s beta?

2. RAR Industries is expected to pay a dividend of $1.50, and the dividend is expected to grow at a constant rate of 7%. This stock is 15% less risky than the market as a whole. The risk-free rate is 6%, and the equity risk premium for the market is 8%. The estimated price of the stock is:

Reference no: EM132066472

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