Suppose are predicting a steady decline foreseeable future

Reference no: EM1335322

Calculating how much should be paid for a stock

Anybody Coal Co. expects tough economic conditions for the foreseeable future. Their current beta is 1.2, the risk-free rate is 10% and the required rate of return on the market is 15%. Anybody paid a dividend of $4 today. Analysts are predicting a steady decline of 6% per year in dividends for the foreseeable future. What is the most you would be willing to pay for this stock?

a) $0
b) $42.40
c) $44.94
d) $17.09
e) $25.00

Reference no: EM1335322

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