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$1.00 The Kummins Engine Company common stock has a beta of 0.9. The current risk-free rate of return is 5 percent and the mar
- From Economics: Financial-Markets
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- Due on Nov. 19, 2008
- Asked on Nov. 19, 2008 at 10:50:44AM
Q:The Kummins Engine Company common stock has a beta of 0.9. The current risk-free rate of return is 5 percent and the market risk premium is 8 percent. The CEO of the company is quoted in a press release saying that the firm will pay a dividend of $0.80 / share in the coming year and expects the dividends to grow at a constant rate of 7 percent for the foreseeable future. Using the constant growth model, what value would you assign to this stock?
