Kokomo Inc. stock is currently selling at $33.1 per share (its equilibrium price). The firm’s longterm growth is expected to remain 5% per year forever. Last year’s EPS were $3, and the dividend payout ratio is 50%. The risk-free rate is 2%, and the market risk premium is 5%. If beta increases by 50%, by how much will the stock price change? Assume all other factors remain constan

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Q: 2.30

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A: Using CAPM

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A:

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A:

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