Using capm and the dividend discount model what is


Craig Corp. just paid dividends of $1.00/share. Analyst Victoria thinks that Craig Corp.'s dividends will grow by 5% for the next three years and then flatten out. She also notices that Craig Corp. is a?heavy industries company and has a beta of 1.5. The general estimates for the economy indicate?that the expected return from the market is about 8% and the yield on a Treasury bond is 1%. Using CAPM and the dividend discount model, what is Victoria's investment value for Craig Corp.?

A) $9.93 B) $10.13 C) $9.73 D) $10.00

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Financial Management: Using capm and the dividend discount model what is
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