(Solved): Buspru Inc. Paid Dividends Per Share Of 2,59 In 2019, And Dividends Are Expected To Grow 1,87% Per Y...
Buspru Inc. paid dividends per share of 2,59 in 2019, and dividends are expected to grow 1,87% per year forever. The stock has a beta of 0.85, and the Treasury bond rate is 2%. Use a risk premium of 5%.
a) What is the value per share 31 December 2019?
b) The stock was trading for $70 per share. What would the growth rate in dividends have to be to justify this price?
c) What issues, if any, does the growth level estimated in b) raise?