Explain what does the market believe will be the stock price

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Reference no: EM13215147

You are considering an investment in Crisp Cookware's common stock. The stock is expected to pay a dividend of $1.5 a share at the end of the year (D1 = $1.50); its beta is 1.20; the risk-free rate is 4.2 %; and the market risk premium is 4%. The dividend is expected to grow at some constant rate g, the stock currently sells for $33 a share. Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years (i.e.,what is P^3)?

Reference no: EM13215147

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