PeteCorp's stock has a Beta of 1.29. Its dividend isexpected to be $3.17 next year, and will grow by 5% peryear after that indefinitely. Assume the risk-free rate is 5%,and the Market Risk Premium is 6%. The stock price wouldcurrently be estimated to be $ ____________Margin of error for correct responses: +/- .05Rounding and Formatting instructions:Do not enter dollar signs, percent signs, commas, X, or anywords in your response. Do not round any intermediatework, but round your *final* response to 2 decimalplaces (example: if your answer is 12.3456, 12.3456%, or$12.3456, you should enter 12.35).

As per CAPM- Required return on stock= Risk-free rate + Beta*Market Risk Premium…

Answered: PeteCorp's stock has a Beta of 1.29.…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 14P

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