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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