1a. The risk-free rate is 2.33% and the market risk premium is 9.76%. A stock with a β of 1.13 just paid a dividend of $2.99. The dividend is expected to grow at 23.43% for three years and then grow at 4.51% forever. What is the value of the stock?
1b. The risk-free rate is 3.05% and the market risk premium is 8.46%. A stock with a β of 1.33 just paid a dividend of $1.29. The dividend is expected to grow at 20.78% for five years and then grow at 3.88% forever. What is the value of the stock?
1c. Suppose the risk-free rate is 1.40% and an analyst assumes a market risk premium of 5.57%. Firm A just paid a dividend of $1.40 per share. The analyst estimates the β of Firm A to be 1.34 and estimates the dividend growth rate to be 4.69% forever. Firm A has 251.00 million shares outstanding. Firm B just paid a dividend of $1.73 per share. The analyst estimates the β of Firm B to be 0.83 and believes that dividends will grow at 2.09% forever. Firm B has 190.00 million shares outstanding. What is the value of Firm A?
1d. Suppose the risk-free rate is 3.09% and an analyst assumes a market risk premium of 5.60%. Firm A just paid a dividend of $1.41 per share. The analyst estimates the β of Firm A to be 1.38 and estimates the dividend growth rate to be 4.92% forever. Firm A has 290.00 million shares outstanding. Firm B just paid a dividend of $1.94 per share. The analyst estimates the β of Firm B to be 0.77 and believes that dividends will grow at 2.78% forever. Firm B has 200.00 million shares outstanding. What is the value of Firm B?