Wall Mart Beta can be used to understand the volatility of the stocks. Understanding volatility is important for a better understand of the risks taken at any one time and not taking on more or less risk than originally planned. It is a measure of how fast a stock rises and falls in relation to the broader stock market. Here for Wal-Mart, a beta of 0.82 will move up or down more slowly, even when the rest of the stock market is making a bold move in either direction.
a. Using the constant growth formula and the data above, what price would you estimate for Wal-Mart according to that model if the dividend was expected to grow by a constant 3%? Show all your work in your computation.