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What does the market believe will be the stock price

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Reference no: EM132741676

You are considering an investment in Keller Corp'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 5.6%, and the market risk premium is 6%. Keller currently sells for $25.00 a share, and its dividend is expected to grow at some constant rate g.

Problem 1: Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years ?

Reference no: EM132741676

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