Kennesaw Corp. has a book value per share at $22. A security analyst estimates that the residual income for the next two years to be $2.75 and $3.15, respectively. The analyst also estimates that the residual income will stay constant at $3.15 in the third year and thereafter. Using the CAPM, the required rate of return on the stock was estimated to be 12%. Using these assumptions, what is the security analyst price per share estimate?

Question 9 options:

1)

$26.86

2)

$47.89

3)

$51.16

4)

$60.05