Hastings Corporation is interested in acquiring Visscher Corporation. Assume that the riskfreerate of interest is 4%, and the market risk premium is 5%. Visscher currently expects to pay a year-end dividend of $1.99 a share (D1 =$1.99). Visscher’s dividend is expected to grow at a constant rate of 5% a year, and its betais 0.8. What is the current price of Visscher’s stock?
Hastings Corporation is interested in acquiring Visscher Corporation. Assume that the riskfreerate of interest is 4%, and the market risk premium is 5%. Visscher currently expects to pay a year-end dividend of $1.99 a share (D1 =$1.99). Visscher’s dividend is expected to grow at a constant rate of 5% a year, and its betais 0.8. What is the current price of Visscher’s stock?
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 7P
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Hastings Corporation is interested in acquiring Visscher Corporation. Assume that the riskfree
rate of interest is 4%, and the market risk premium is 5%.
Visscher currently expects to pay a year-end dividend of $1.99 a share (D1 =
$1.99). Visscher’s dividend is expected to grow at a constant rate of 5% a year, and its beta
is 0.8. What is the current price of Visscher’s stock?
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