1 Constant growth 2 3 Expected year-end dividend (D₁) 4 Beta coefficient 5 Risk-free rate (TRF) 6 Market risk premium (R

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1 Constant Growth 2 3 Expected Year End Dividend D 4 Beta Coefficient 5 Risk Free Rate Trf 6 Market Risk Premium R 1 (67.75 KiB) Viewed 23 times

1 Constant growth 2 3 Expected year-end dividend (D₁) 4 Beta coefficient 5 Risk-free rate (TRF) 6 Market risk premium (RPM) 7 Current stock price (Po) Market in equilibrium 8 9 10 Calculate required return: 11 Required return on common stock 12 13 Calculate constant growth rate, g: 14 Total return on common stock Expected dividend yield 15 16 Expected capital gains yield 17 18 Calculate stock price in 3 years, P3: 19 Number of years from today 20 Calculate P3 using Po 21 22 Alternative calculation: 23 Calculate P3 using dividends 24 25 $2.50 0.90 3.60% 5.00% $34.00 Yes 3 Formulas #N/A #N/A #N/A #N/A #N/A #N/A