# Expected Stock Price

Yohe Technology's stock is expected to pay a dividend of $2.00 a share at the end of the year. The stock currently has a price of $40 a share, and the stock's dividend is expected to grow at a constant rate of g percent a year. The stock has a beta of 1.2. The market risk premium, kM - kRF, is 7 percent and the risk-free rate is 5 percent. What is the expected price of Yohe's stock 5 years from today?

A. $51.05

B. $55.23

C. $59.87

D. $64.90

E. $66.15

https://brainmass.com/business/accounting-for-corporations/expected-stock-price-155404

#### Solution Preview

We first find the growth rate

Using the constant growth model

Cost of equity ...

#### Solution Summary

The solution explains how to calculate the expected stock price in 5 years.

$2.19