Next years didvidend for ERT stock is expected to be $4.00. You expect it to be $4.00 in 2 years, also, but then you expect it to grow at an 8% annual rate forever. If the risk-free rate of interest is 1%, the expected market return is 9%, and the ERT's beta is 2.0 then what is the price of the stock today?© BrainMass Inc. brainmass.com March 4, 2021, 6:07 pm ad1c9bdddf
First calculate the rate of return required on ERT using CAPM
r = rf + ...