Humana Inc.'s last dividend (Do) was $1.12, and its earnings and dividends are expected to increase at a constant growth rate of 12 percent. Humana's market beta is 1.16. If the current risk-free rate is 5 percent and the required rate of return on the market portfolio is 12 percent, what is the company's current expected stock price?
Humana Inc.'s last dividend (Do) was $1.12, and its earnings and dividends are expected to increase at a constant growth rate of 12 percent. Humana's market beta is 1.16. If the current risk-free rate is 5 percent and the required rate of return on the market portfolio is 12 percent, what is the company's current expected stock price?
Chapter12: The Cost Of Capital
Section: Chapter Questions
Problem 23P
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