BBP, Inc., has experienced a recent resurgence in business as it has gained new national identity. Management is forecasting rapid growth over the next 4 years (annual rate of 15%). After that, it is expected that the firm will revert to its historical growth rate of 2% annually. The last dividend paid was $1.50 per share, and the required return is 10%. What is the current price per share, assuming equilibrium?" 29.56 39.56 28.56 27.56

BBP, Inc., has experienced a recent resurgence in business as it has gained new national identity. Management is forecasting rapid growth over the next 4 years (annual rate of 15%). After that, it is expected that the firm will revert to its historical growth rate of 2% annually. The last dividend paid was $1.50 per share, and the required return is 10%. What is the current price per share, assuming equilibrium?" 29.56 39.56 28.56 27.56

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter7: Valuation Of Stocks And Corporations

Section: Chapter Questions

Problem 21P

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BBP, Inc., has experienced a recent resurgence in business as it has gained new national identity. Management is forecasting rapid growth over the next 4 years (annual rate of 15%). After that, it is expected that the firm will revert to its historical growth rate of 2% annually. The last dividend paid was $1.50 per share, and the required return is 10%. What is the current price per share, assuming equilibrium?
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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 22% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends 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? Do not round intermediate calculations. a. $27.82 b. $27.21 c. $29.13 d. $25.83 e. $26.57