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What is the appropriate price for the stock

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Reference no: EM132139843

A company stock is paying $ 5 in dividends, with a 3 % growth rate.

The U.S. Treasury bond yield is 1 % (the risk free rate). The stock sells for $56. What is the implied risk premium? 

Round your answer to two decimal places, and enter as a percent but do not type of % sign. 

So, for example, if you get an answer of .0926 it is 9.26%. You will type 9.26 in the box.

A company stock is paying $ 4 in dividends, with a 1 % growth rate.

The U.S. Treasury bond yield is 2 % (the risk free rate). The risk premium is 5 %.

What is the appropriate price for the stock? Round your answer to two decimal places, and do not type the $ sign.

Suppose the actual price of the stock in the markets is $65.

Is the stock in question 3 over or under valued at this price? Be sure to explain how you arrive at your answer.

Reference no: EM132139843

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