# Stock Value Using CAPM and DDM

Not what you're looking for?

Frazier Manufacturing paid a dividend last year of $2, which is expected to grow at a constant rate of 5%. Frazier has a beta of 1.3. If the market is returning 11% and the risk-free rate is 4%, calculate the

value of Frazier's stock.

##### Purchase this Solution

##### Solution Summary

This solution calculates Stock Value using Capital Asset Pricing Model (CAPM) and Dividend Discount Model (DDM) with step-by-step workings and all formulas shown in excel file.

##### Solution Preview

See excel spreadsheet attached.

1) We first calcuate the required return on equity using CAPM

CAPM (Capital Asset Pricing Model) equation is:

r A= r f + βA (r m - r f)

risk free rate= r f ...

##### Purchase this Solution

##### Free BrainMass Quizzes

##### Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

##### Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

##### Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

##### Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

##### Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.