Scott, Inc. common stock has an equity beta of 1.1, the annual risk-free rate is 5%,...

Scott, Inc. common stock has an equity beta of 1.1, the annual risk-free rate is 5%, and the expected return on the market portfolio is 10%. The firm expects that following 2009 its dividends will increase at the same annual compound rate as that over the 2006-2009 period.

Year. Dividend
2006 2.5
2007 2.6
2008 2.7
2009 2.8

Estimate the value of a share of Scott, Inc.’s stock using the dividend discount model. Round your final answer to two decimals.

Expert Solution

jeff jeffy answered 1 year ago

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