What price would you expect tcks common stock to sell

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Reference no: EM131504475

Twin City Knitting (TCK) pays a current dividend of $2.20 and dividends are expected to grow at a rate of 7 percent annually in the foreseeable future. The beta of TCK is 1.2. If the risk-free rate is 9.2 percent and the market risk premium is 6 percent, at what price would you expect TCK’s common stock to sell? (Hints: Market risk premium = expected market return – risk-free rate. First calculate the required return and then determine price P0 from the equity return equation with dividends growing at a constant rate.)

Reference no: EM131504475

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