Posted by **Kim** on Tuesday, October 24, 2006 at 1:29pm.

What is the value of a common stock if:

a) If earnings and dividends are growing annually at 10%, the current dividend is $1.32 and investors require a 15% return on investmenets in common stock?

b)What is the value of this stock if you add risk to the analysis and the firm's beta coefficient is 0.8, the risk-free rate is 9%, and the return on the market is 15%?

Thank you so much, I have lost my book and I need help with this one.

You've given us data about this stock -- but not the current selling price. You need to know that to determine its present value. But -- with earnings and dividends (sales, too?) growing annually at 15%, it's likely that the price will grow at something considerably less than 15%. This is also shown by the low beta coefficient of 0.8.

## Answer this Question

## Related Questions

- Finance - Assume a stock has just paid a $2.00-per-share dividend. Analysts ...
- Finance - What is the annual rate of return on an investment in a common stock ...
- FINANCE - General Cereal common stock dividends was $0.79 in 2000 and the last ...
- financial management - your investment advisor has sent you three reports for a ...
- Finance. PLEASE HELP ME - 1) growth rates The stock price of the company is $76 ...
- Finance questions - 1) growth rates The stock price of the company is $76 ...
- Finance - Hooks Athletics, Inc., has outstanding a preferred stock with a par ...
- Finance - Hooks Athletics, Inc., has outstanding a preferred stock with a par ...
- finance - How much should you be willing to pay for one share of stock if the ...
- value of common stock - • Emerson Electric common stock that is selling for $80 ...