Problem:
Assume the risk free rate is 6 percentage and the market risk premium is 6 percentages. The stock of physician care network is(PCN) has a beta of 1.5. The last dividend paid by PCN (D0) was $2 per share. a. What would be PCN's stock value be if the dividend was expected to grow at a constant; -5%,0%5% 10% b.
Required:
What would be the stock value if the growth rate is 10 percentage, but PCN's beta falls to 1.0, 0.5?
Please explain in detail.