Village Goofball stock is currently priced at $71.95 per share and is expected to pay its next dividend, which is expected to be $7.32, in 1 year. The stock has arisk premium of 10.18%, the risk-free rate is 4.91%, and inflation is expected to be 2.92%. What is the stock price of Village Goofball expected to be in 1 year?O $80.71 (plus or minus 10 cents)$82.81 (plus or minus 10 cents)$75.49 (plus or minus 10 cents)$81.38 (plus or minus 10 cents)None of the above is within 10 cents of the correct answer

Here's how to calculate the expected stock price of Village Goofball in 1 year:Capital Asset Pricing…

Answered: Village Goofball stock is currently…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 2P

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Similar questions

A stock is trading at $80 per share. The stock is expected to have a yearend dividend of $4 per share (D1 = $4), and it is expected to grow at some constant rate, g, throughout time. The stock’s required rate of return is 14% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of gL?
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