Vonderboom Company just paid a dividend of $1.67 per share to its stocholders. Market analysts believe Vonderboom Company will grow by 19% next year, 13.75% the following year, and 13% the year after. Then, it is projected that Vonderboom Compnay will grow at a constant rate of 4.75% per year indefinitely. The current rate of interest on risk - free assets is 2.51 %, and the rate of return on market portfolio is 11.25 %. Vonderboom Company's beta is estimate to be 1.09. What is the estimate of the current market price of Vonderboom Company's stock?
Vonderboom Company just paid a dividend of $1.67 per share to its stocholders. Market analysts believe Vonderboom Company will grow by 19% next year, 13.75% the following year, and 13% the year after. Then, it is projected that Vonderboom Compnay will grow at a constant rate of 4.75% per year indefinitely. The current rate of interest on risk - free assets is 2.51 %, and the rate of return on market portfolio is 11.25 %. Vonderboom Company's beta is estimate to be 1.09. What is the estimate of the current market price of Vonderboom Company's stock?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
![Vonderboom Company just paid a dividend of $1.67 per
share to its stocholders. Market analysts believe
Vonderboom Company will grow by 19% next year,
13.75% the following year, and 13% the year after. Then,
it is projected that Vonderboom Compnay will grow at a
constant rate of 4.75% per year indefinitely. The current
rate of interest on risk - free assets is 2.51 %, and the rate
of return on market portfolio is 11.25 %. Vonderboom
Company's beta is estimate to be 1.09. What is the
estimate of the current market price of Vonderboom
Company's stock?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F48eeaa09-cac9-4bbe-be6c-1dfcb047be9a%2Fc542e654-1bc6-4364-a027-b13c07aa10c1%2Fomkv4uu_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Vonderboom Company just paid a dividend of $1.67 per
share to its stocholders. Market analysts believe
Vonderboom Company will grow by 19% next year,
13.75% the following year, and 13% the year after. Then,
it is projected that Vonderboom Compnay will grow at a
constant rate of 4.75% per year indefinitely. The current
rate of interest on risk - free assets is 2.51 %, and the rate
of return on market portfolio is 11.25 %. Vonderboom
Company's beta is estimate to be 1.09. What is the
estimate of the current market price of Vonderboom
Company's stock?
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