The Aldridge Co. is expected to grow at 6% into the indefinite future. Its latest annual dividend

Question:

The Aldridge Co. is expected to grow at 6% into the indefinite future. Its latest annual was $2.50. Treasury bills currently earn 7% and the S&P 500 yields 11%.
a. What price should Aldridge shares command in the market if its beta is 1.3?
b. Evaluate the sensitivity of Aldridge’s price to changes in expected growth and risk by recalculating the price while varying the growth rate between 5% and 7% (increments of 1%) and varying beta between 1.2 and 1.4 (increments of .1).

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...