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What is the required rate of return on the firms stock

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Reference no: EM133233597

Assume that Apple Inc has a beta coefficient of 1.2, the risk-free rate (the yield on Government of T-Bills) is 5%, and the market risk premium is 5%. The company has experienced revenue growth for the last few years and the analyst expects that its dividend is expected to grow indefinitely at a 2 percent rate.

1. What is the required rate of return on the firm's stock?

2. What is the firm's current stock price?

3. What is the stock's expected value 1 year from now?

4. What are the expected dividend yield, the capital gains yield, and the total return during the first year?

Reference no: EM133233597

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