Financial Management
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Financial Management


  • High School
  • 623

Short excerpt:

Find an estimate of the risk-free rate of interest (krf). To obtain this value, go to Market Data and use the "U.S. 10-year Treasury" bond rate (middle column) as the risk-free rate. In addition, you also need a value for the market risk premium. Use an assumed market risk premium of 7.5%.ЊжUsing the information from the XYZ Stock Information document, record the following values:ЊжXYZ's beta (нЩ)Њж= 1.64 (60-month)XYZ's current annual dividend = $ 0.80XYZ's 3-year dividend growth rate (g) = 8.2%Industry P/EЊж= 23.2XYZ's EPSЊж = $ 4.87Here current dividend D = $ 0.8 and the dividend growth rate = 8.2% therefore the expected dividend growth rate for next year will be D1 = 0.8 + (0.8*8.2%) = 0.8656%Now use the XYZ Stock Information to find XYZ's current stock quote (P).

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