Multiple Choice
Kermit Industries' current common stock dividend is $1.35 per share, and the dividend is expected to grow at 6% per year into the foreseeable future. Currently the risk-free rate is 4.5% and the estimated market risk premium is 8.5%. Merrill Lynch has estimated KI's beta to be 1.10. Compute the expected price for KI's common stock.
A) $17.20
B) $10.33
C) $18.23
D) $49.35
Correct Answer:
Verified
Correct Answer:
Verified
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