McGaha Enterprises expects earnings and dividends to grow at a rate of 25% for the next 4 years, after the growth rate in earnings and dividends will fall to zero, i.e., g = 0. The company's last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?
A. $26.77
B. $27.89
C. $29.05
D. $30.21
E. $31.42
Answer: C
You might also like to view...
A new company issues 2,000 shares of $5 par common stock in exchange for the services of a lawyer during its first month of business. The lawyer's normal fee is $15,000 for similar work. Which of the following would be recorded if the stock is not currently trading?
a. A debit to Common Stock for $10,000 b. A credit to Common Stock for $15,000 c. A debit to Additional Paid-In Capital—Common Stock of $5,000 d. A credit to Additional Paid-In Capital—Common Stock of $5,000
When FTA members add shared external tariffs to their agreement, they have formed a
A. trade conglomerate. B. customs union. C. duties agreement. D. free trade association, such as NAFTA.
The international activities of those engaging in transnational crime and terrorism overlap. However, their primary motives are different. The primary motive of those engaged in transnational crime is financial. The primary motive of those engaged in terrorism is ______.
Fill in the blank(s) with the appropriate word(s).
Culture might be a less ______ dimension in virtual groups because of the lack of evidence of cultural differences.
A. complex B. diverse C. salient D. ambiguous