Motor Homes Inc (MHI) is presently in a stage of abnormally high growth because of a surge in the demand for motor homes
The company expects earnings and dividends to grow at a rate of 20% for the next 4 years, after which time there will be no growth (g=0 ) in earnings and dividends. The company's last dividend was $1.50. MHI has a beta of 1.6, the return on the market is currently 12.75%, and the risk-free rate is 4%. What should be the current price per share of common stock?
A) $15.17
B) $17.28
C) $22.21
D) $19.10
E) $16.20
A
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