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  • Nov 12, 2011, 02:38 PM
    mmomadesigns
    Johnson’s Corp.s Finance Test
    Johnson's Corp.s stock is expected to pay a dividend of $2.00 per share at the end of year one and the stock's beta is 0.9. The risk free rate is 5.6% and the market risk premium is 6%. The stock currently sells for $25 a share and its dividend is expected to grow at some constant rate g. Assuming the market is in equilibrium , what does the market believe will be the stock price at the end of 3 years ?

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