Econet Company is expected to pay a dividend in year 1 of $2, a dividend in year 2 of $3, and a dividend in year 3 of $4. After year 3, Econet expects a ROE of 30% and a payout ratio of 83.33% dividends are expected to grow at the rate of 5% per year. Econet has a beta of 0.625, the risk free rate is 6% and the market risk premium is 8%. Calculate the current intrinsic value of Econet stock. $63.80 $65.13 $67.95 $85.60 $58.34

Econet Company is expected to pay a dividend in year 1 of $2, a dividend in year 2 of $3, and a dividend in year 3 of $4. After year 3, Econet expects a ROE of 30% and a payout ratio of 83.33% dividends are expected to grow at the rate of 5% per year. Econet has a beta of 0.625, the risk free rate is 6% and the market risk premium is 8%. Calculate the current intrinsic value of Econet stock. $63.80 $65.13 $67.95 $85.60 $58.34

Name: Econet Company is expected to pay a dividend in year 1 of $2, a divide
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Description: Econet Company is expected to pay a dividend in year 1 of $2, a dividend in year 2 of $3, and a dividend in year 3 of $4. After year 3, Econet expects a ROE of 30% and a payout ratio of 83.33% dividends are expected to grow at the rate of 5% per year

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter12: The Cost Of Capital

Section: Chapter Questions

Problem 22P

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