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What does the market believe will be the stock price

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Question - You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $1.75 a share at the end of the year (D1 = $1.75) and has a beta of 0.9. The risk-free rate is 3.1%, and the market risk premium is 4.5%. Justus currently sells for $40.00 a share, and its dividend is expected to grow at some constant rate, g.

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

Reference no: EM133170218

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