Happy Feet Shoe Co. paid a dividend of $5.73 on its common stock at the end of last year. This company's dividends are expected to grow at a constant rate of 2% indefinitely. If the firm's beta is 1.29, the risk free rate is 6, and the market risk premium is 17, what is the value per share of Happy Feet's stock

$23.43

Explanation:

To calculate the value of the share, first we need to calculate the required rate of return

Capital asset pricing model measure the required return on an asset or investment. it is used to make decision for addition of specific investment in a well diversified portfolio.

Formula for CAPM

Expected return = Risk free rate + beta ( market risk premium )

Er = Rf + ( Mrp )

By placing values in the formula

Er = 6% + 1.29 ( 17% )

Er = 5% + 21.93%

Er = 26.93%

Dividend Valuation method is used to value the stock price of a company based on the dividend paid, its growth rate and rate of return. The price is calculated by calculating present value of future dividend payment.

Value of Share = Dividend ( 1+growth rate ) / (Rate of return - Growth rate)

P0 = D0 ( 1+g ) / (r - g )

By placing values in the formula

P0 = $5.73 ( 1+2% ) / (26.93% - 2% )

P0 = $5.84 / 24.93%

P0 = $23.43

you can lose ranking 2 ways.

1) you don't have enough points due to you expending them by asking questions/your answers are deleted.

2) your brainliest's expired. this means that brainliests, once they exceed the 30 day limit, expires. this is to ensure that you continue to contribute into the community at a constant rank if you want to continue to have/exceed the rank you have right now.

if you go to profile, and click "show more information" located on the bottom left of the box with your information (on top of the questions answered, questions asked, and friends), you will be given the following information (example):

member since : 02/13/2017, 18: 11

questions answered: 9741

questions asked: 162

no. of brainliest answers: 1575

brainliest answers in last 30 days: 10

warnings: 0 view

questions/answers reported: 2637

questions/answers incorrectly reported: 64

look at the "brainliest answers in the last 30 days". this is the one that will affect your rank other than your points. again, once your brainliest expires (was earned 31+ days ago), it will not be counted.

~

fnfjfjjfjf nh ngngnfnfnfnnfn