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Sun TV Inc. is presently enjoying relatively high growth becauseof a surge in the demand for its new product. Management expectsearnings and dividends to grow at a rate of 22% for the next 4years, after which competition will probably reduce the growth ratein earnings and dividends to zero, i.e., g = 0. The company’s lastdividend, D0, was $1.25, its beta is 1.20, the marketrisk premium is 5.50%, and the risk-free rate is 3.00%. What is thecurrent price of the common stock?a. $26.57b. $32.69c. $28.97d. $23.39e. $27.37
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