Respuesta :
The current value of the stock is $53.413455.
What is the CAMP model?
- The CAMP model describes the relationship between systemic risk, or the general dangers of investing, and projected return on assets, specifically stocks.
To find the current price of stock:
Stock’s current price: 53.41 dollars
First, we determine the stock's value using the CAPM model.
- Ke = rf + (rm - rf)
- risk free, rf = 0.085.
- premium market = (rm - rf) = 0.045
- (nondiversifiable risk) = 1.3
Then, Ke = 0.085 + 1.3(0.045).
- Ke = 0.14350
The current value of the future dividends must now be known:
- D0 = 2.8
- D1 = D0 x (1 + g) = 2.8 * 1.23 = 3.444
- D2 = 3.444 x 1.23 = 4.2361200
The next dividends, which are at perpetuity will be solved using the dividend growth model:
- dividends/return-growth = Intrinsic value
In this case, dividends will be:
- 4.23612 x 1.07 = 4.5326484
Return will be calculated using the CAPM and g = 7%.
plug this into the Dividend grow model,
- 4.53264840.1435-0.07 = Intrinsic Value
- Value of the dividends at perpetuity: 61.6686857
Finally, it's crucial to remember that these statistics were calculated for the present year.
We must bring them to the present day using the present value of a lump sum:
- principal/(1 + rate)time = PV
- 3.444/(1 + 0.1435)1 = PV
- 3.011805859 = PV
- 4.23612/(1 + 0.1435)2 = PV
- 3.239633762 = PV
- 61.6686857/(1 + 0.1435)2 = PV
- 47.16201531 = PV
We add them and get the value of the stock, 53.413455
Therefore, the current value of the stock is $53.413455.
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