Constant and nonconstant growth valuation
Can someone please help me, i am stumped on these 2 problems? Thanks.
1-A company currently pays dividnd of $2 per share. It is estimated that the conpnay's divivend will grow at a rate of 20% per year for the next 2 years and then grow at a constant 7% therafter. The compnay's stock has a beta equal to 1.2, the risk-free rate is 7.5% and the narket risk premium is 4%. What s your estimate of tyhe stock's current price?
2- The risk-free rate of return is 11%, the requires rate of return on the market is 14% and Schuler Compnay's stock has a beta coefficent of 1.5.
a. If the dividend expected during the coming year is $2.25 and g= a constant 5%, at what price should Schuler's stock sell?
b. Now, suppose the Federal Reserve Baord increses the money supply, causing the risk-free rate to drop to 9% and the rate on the market falls to 12%. what would this do to the price of the stock?