Business, 10.03.2020 07:43 raiindrxp

Assume a major investment service has just given Oasis Electronics its highest investment rating, along with a strong buy recommendation. As a result, you decide to take a look for yourself and to place a value on the company's stock. Here's what you find: This year, Oasis paid its stockholders an annual dividend of

$2.55

a share, but because of its high rate of growth in earnings, its dividends are expected to grow at the rate of
12 %
a year for the next 4 years and then to level out at
9 %
a year. So far, you've learned that the stock has a beta of
1.64 ,
the risk-free rate of return is
5 %,
and the expected return on the market is
11 %.
Using the CAPM to find the required rate of return, put a value on this stock.

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Assume a major investment service has just given Oasis Electronics its highest investment rating, al...

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