The YTC Corporation just paid an annual dividend of $1.50. Harry expects the dividends of the YTC Corporation to grow at 12% for the next four years and at 7% thereafter. The beta of YTC is 1.25 and Harry considers the market risk premium to be 4.2%. A five-year, zero-coupon Treasury bond is yielding 4.01%. What value should Harry place on the stock?

Question

Quizplus · Accepted Answer

The Answer of The YTC Corporation just paid an annual dividend of $1.50. Harry expects the dividends of the YTC Corporation to grow at 12% for the next four years and at 7% thereafter. The beta of YTC is 1.25 and Harry considers the market risk premium to be 4.2%. A five-year, zero-coupon Treasury bond is yielding 4.01%. What value should Harry place on the stock?

The YTC Corporation Just Paid an Annual Dividend of $1