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Given the following information from Sunland Corporation, what price would the CAPM predict that the companys stock will tra

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Answer #1

rate positively..

AS per CAPM required rate = Risk free rate + market risk premium*beta
=2.9%+9.5%*0.8
10.50%
Current stock price =       68.65
Required return for next year @10.5% =          7.21
Total =       75.86
Less: Annual dividend =          1.78
Price next year =       74.08
Ans =       74.08
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