Question 38 (1 point) What is the beta of Tauntaun Corp. if it has an expected...

Question 38 (1 point) What is the beta of Tauntaun Corp. if it has an expected return of 10%, the yield on a Treasury Bill is 2.00%, and the expected return on the market is 8.00%?

Question 39 (1 point) Fortuna Inc. will pay a dividend of $ 4 next year. Dividends are expected to grow at 3% after next year's dividend. The required rate of return for similar stocks is 7%. What is the current value of Fortuna Inc. stock?

Question 40 (1 point) Rancorp just paid a dividend of $ 4. Dividends are expected to grow at 10% for the next two years after which they will grow at 2% indefinitely. The required rate of return for similar stocks is 10%. What is the current value of Rancorp stock?

Solutions

Expert Solution

38.

The formula to calculate beta is shown below:

Beta is 1.33.

39.

The stock value is calculated below:

40.

The formula for the future dividends is:

The dividend after one year is calculated below:

The dividend after 2 years is calculated below:

The stock price after 2 years is :

The current stock value is calculated below:

The current stock value is $59.

jeff jeffy answered 2 years ago

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