Question

PLEASE SHOW ALL FORMULAS:

Facts:
The Current risk free rate is				10.0%
Market is providing a return of				15.0%
Beta of				1.30
Recent History of Dividends per share:
Expect to pay dividend per share next year of				3.18
Year	Dividend
2015	2.94
2014	2.75						Calculator
2013	2.48					Input	Function
2012	2.36						PV
2011	2.14						FV
2010	2.00						N
A) Calculate the constant growth rate:
Average annual growth rate in percent					Solve for I	=
Do parts B, C and D, using the Capital Asset Pricing Model (CAPM):
B) Determine the maximum cash price should pay for each share
			CAPM =
P = D / (r - g)			P = D / (r - g)			$ -
D (Per Share Dividend) Expected			D (Dividend) =
r (Required Return)			r (CAPM Rate) =
g (Growth rate)			g (Growth rate) =
C) Determine the effect on stock price if a 3% higher growth rate than shown in history.
			CAPM =
P = D / (r - g)			P = D / (r - g)			$ -
D (Per Share Dividend) Expected			D (Dividend) =
r (Required Return)			r (CAPM Rate) =
g (Growth rate)			g (Growth rate) =
D) If facts are same as B) above but Beta has changed to 1.0, determine max. cash price per share
			CAPM =
P = D / (r - g)			P = D / (r - g)			$ -
D (Per Share Dividend) Expected			D (Dividend) =
r (Required Return)			r (CAPM Rate) =
g (Growth rate)			g (Growth rate) =