Question

DQuestion 13 5 pts Phoenix Solar is expected to pay a dividend of $3.60 in the upcoming year, and their stock is trading in the market today at $60 per share. Dividends are expected to grow at the rate of 7.2% per year. If the risk free rate of return is 4% and the expected return on the market portfolio is 12%, what is the stock's beta? | Your answer should be between 0.34 and 2.12, rounded to 2 decimal places, with no special characters. D Question 14 5 pts Kelso Corporation just paid a dividend of Do- $1.35 per share, and that dividend is expected to grovw at a constant rate of 6.50% per year in the future. The company's beta is 1.70, the required return on the market is 10.50%, and the risk-free rate is 4.50%, what is the company's current stock price? Your answer should be between 8.22 and 37.40, rounded to 2 decimal places, with no special characters.

Answer 1

Q13.

As per Constant Dividend Growth Model,

Stock Price = D₁/(r - g)

60 = 3.60/(r - 0.072)

r = 13.20%

As per CAPM Model,

Required Rate = R_f + Beta(R_m - R_f)

0.1320 = 0.04 + Beta(0.12 - 0.04)

Beta = 1.15

Q14.

As per CAPM Model,

Required Rate = R_f + Beta(R_m - R_f)

Required Rate = 0.045 + 1.70(0.105 - 0.045)

Required Rate = 14.70%

As per Constant Dividend Growth Model,

Stock Price = D₀(1 + g)/(r - g)

Stock Price = 1.35(1.065)/(0.1470 - 0.065)

Stock Price = $17.53