Question 18

ABC Corporation just paid a dividend of D0 = $2.25 per share, and that dividend is expected to grow at a constant rate of 6.50% per year in the future. The company's beta is 1.25, the required return on the market portfolio is 10.50%, and the risk-free rate is 4.50%. What is the company's current stock price?

a. 14.52

b. 36.3

c. 19.65

d. 43.56

e. 37.15