Everest 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 20% for the next

2 years, 15% in year 3 and 4 and after which competition will probably reduce the growth rate in

earnings and dividends to constant growth rate of 6%. The companys last dividend was $2, its

beta is 2, the market risk premium is 9%, and the risk-free rate is 7%. What is the current price of

the common stock?

Answer: ($15.72)

Please workout solution