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You want to buy-Burrito Inc. stock. They pay annual dividends, with the next dividend of $0.45 per sharebeing paid later today. You believe that, during the next 10 years, their annual dividends will grow by 45% APR, compounded annually. But after 10 years, their annual dividends will grow more slowly... only at 4% APR, compounded annually. 1 Burrito Inc. has a beta of 1.78. The risk-free rate ofreturn is 3%, and the average risk premium is 6%. What should be the price ofa share of Burrito stock? (You can assume that the return given by the CAPM is compounded annually).

You want to buy-Burrito Inc. stock. They pay annual dividends, with the next dividend of $0.45 per sharebeing paid later today. You believe that, during the next 10 years, their annual dividends will grow by 45% APR, compounded annually. But after 10 years, their annual dividends will grow more slowly... only at 4% APR, compounded annually. 1 Burrito Inc. has a beta of 1.78. The risk-free rate ofreturn is 3%, and the average risk premium is 6%. What should be the price ofa share of Burrito stock? (You can assume that the return given by the CAPM is compounded annually).

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 3P
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I have 3 questions I'm working on and need help. They build on the first question. I need help to organize in excel. I will post the first question. then post the other 2 in upcoming "Ask a Question".

You want to buy-Burrito Inc. stock. They pay annual dividends, with the next dividend of $0.45 per sharebeing paid later today. You believe that, during the next 10 years, their annual dividends will grow by 45% APR, compounded annually. But after 10 years, their annual dividends will grow more slowly... only at 4% APR, compounded annually. 1 Burrito Inc. has a beta of 1.78. The risk-free rate ofreturn is 3%, and the average risk premium is 6%. What should be the price ofa share of Burrito stock? (You can assume that the return given by the CAPM is compounded annually).
Transcribed Image Text:You want to buy-Burrito Inc. stock. They pay annual dividends, with the next dividend of $0.45 per sharebeing paid later today. You believe that, during the next 10 years, their annual dividends will grow by 45% APR, compounded annually. But after 10 years, their annual dividends will grow more slowly... only at 4% APR, compounded annually. 1 Burrito Inc. has a beta of 1.78. The risk-free rate ofreturn is 3%, and the average risk premium is 6%. What should be the price ofa share of Burrito stock? (You can assume that the return given by the CAPM is compounded annually).
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