Facebook is planning on issuing common stock for the first, Financial Management

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Facebook is planning on issuing common stock for the first

Facebook is planning on issuing common stock for the first time and you are considering buying its stock. Facebook will pay its first dividend of $2 per share four years from today and the dividend will grow 3% per year in perpetuity. Assume that the market risk premium is 7%, the risk-free rate is 2%, and the beta of Facebook is 0.8. What would you expect the stock price of Facebook to be?

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Financial Management: Facebook is planning on issuing common stock for the first

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