Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 32% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = o. The company's last dividend, Do, was $1.30, its beta is 1.80, the market risk premium is 5.50%, and the risk-free rate is 2.50%. What is the current price of the common stock? Do not round intermediate calculations. Oa. $27.84 Ob. $28.82 O c. $31.29 O d. $26.78 Oe. $29.14

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and
dividends to grow at a rate of 32% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero,
i.e., g = o. The company's last dividend, Do, was $1.30, its beta is 1.80, the market risk premium is 5.50%, and the risk-free rate is 2.50%. What is the
current price of the common stock? Do not round intermediate calculations.
a. $27.84
b. $28.82
c. $31.29
d. $26.78
e. $29.14
Transcribed Image Text:Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 32% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = o. The company's last dividend, Do, was $1.30, its beta is 1.80, the market risk premium is 5.50%, and the risk-free rate is 2.50%. What is the current price of the common stock? Do not round intermediate calculations. a. $27.84 b. $28.82 c. $31.29 d. $26.78 e. $29.14
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