The companys beta is 125 the market risk premium is 5 and


A company just paid a dividend of $0.80 per share and the dividend is expected to grow at a constant rate of 6% per year in the future. The company’s beta is 1.25, the market risk premium is 5%, and the risk-free rate is 4%. What is the company’s current stock price (round your answer to two decimal places)? (i) Describe and interpret the assumptions related to the problem. (ii) Apply the appropriate mathematical model to solve the problem. (iii) Calculate the correct solution to the problem.

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Financial Management: The companys beta is 125 the market risk premium is 5 and
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