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Stock price in future

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A stock that currently trades for $50 per share is expected to pay a year-end dividend of $2 per share. The dividend is expected to grow at a constant rate over time. Beta is 1.2, risk-free rate is 5%, and market risk premium is 5%. What is the stock's expected price seven years from today? (Please include formula in Excel)

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Solution Summary

The solution explains how to calculate the stock price in future.

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Using the dividend discount model,
Stock Price in Year 7 (P7) = D8/(Ke-g)
Where
D8 is the dividend in year 8, Ke is the ...

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