Calculate the company-specific required rate

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Reference no: EM133377280

Part 1:

Calculate the company-specific required rate of return using the CAPM formula. Show all calculations.
Use beta 1.22. Use a risk-For the market risk premium, use the following asfree rate of 2.0%.sumptions: For a large capitalization company (greater than $10.0 billion in market capitalization) use 6.0% as the market risk premium.

Part 2:

Recalculate both estimates (the low-end and the high-end) of the stock price using the constant growth formula.
Use the company's specific required rate of return you determined using the CAPM.
Compare each of the two recalculated stock prices to the current stock price per share of the company.
State whether each recalculated stock price (low-end and high-end) is above or below the current market price.
State whether each recalculated stock price (low-end and high-end) indicates if the stock price is currently under-valued or over-valued in the market.
State a recommendation for your concluded stock price for the company.
Use either the high-end stock price or the low-end stock price from the constant growth formula using the CAPM required rate of return.

Reference no: EM133377280

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