Mulligan’s Used Golf Balls (MUGB) is a fairly risky company with a beta of 2.2. The current Treasury bill rate is 1% and the expected return on the S&P500 is 11%. What is the required rate of return (or cost of equity) for MUGB stock?
Using the information from problem #5. MUGB expects to pay a dividend of $2.00 per share exactly 1 year from today and expects dividends to grow 3% annually. What is the value of a share of MUGB stock?