The YTC Corporation Just Paid an Annual Dividend of $1

question 14

Essay

The YTC Corporation just paid an annual dividend of $1.50. Harry expects the dividends of the YTC Corporation to grow at 12% for the next four years and at 7% thereafter. The beta of YTC is 1.25 and Harry considers the market risk premium to be 4.2%. A five-year, zero-coupon Treasury bond is yielding 4.01%. What value should Harry place on the stock?

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Definitions:

Precipitation

Any form of water, liquid or solid (rain, snow, sleet, hail), that falls from the atmosphere and reaches the ground.

Desert Animals

Fauna specially adapted to survive in desert climates, often featuring adaptations such as water conservation and temperature regulation.

Estivate

A period of dormancy or inactivity observed in some animals during hot or dry seasons to conserve energy.

Rainy Season

A period of the year characterized by increased rainfall compared to other periods, typically influenced by geographic and climatic factors.