What price does dividend growth model suggest

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PSEG is currently trading at $70 per share. a broker at morgan stanley suggests that PSEG stock is a good purchase at $65 per share. you conduct your own research and employ the dividend growth model. Assume PSEG paid $3.00 /share in dividends in the latest yeat, has a project long term growth rate of 3%, and has a beta coefficient of .85. Further assume the Treasury bond yield is 3.75% and the projected market return (S&P500 index) is 8.25%. What price does the dividend growth model suggest, and do you agree or disagree with the brokers opinion?

Reference no: EM131558867

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