L’arancia Company just paid a dividend of $1.67 per share to its stockholders. Market analysts believe L’arancia Company
Posted: Sun Jun 05, 2022 7:40 am
L’arancia Company just paid a dividend of $1.67 per share to its
stockholders. Market analysts believe L’arancia Company will grow
by 19 percent next year, 13.75 percent the following year, and 13
percent the year after. Then, it is projected that L’arancia
Company will grow at a constant rate of 4.75 percent per year
indefinitely. The current rate of interest on risk-free asset is
2.51 percent, and the rate of return on market portfolio is 11.25
percent. L’arancia Company’s beta is estimated to be 1.09. What is
your estimate of the current market price of L’arancia Company’s
stock?
stockholders. Market analysts believe L’arancia Company will grow
by 19 percent next year, 13.75 percent the following year, and 13
percent the year after. Then, it is projected that L’arancia
Company will grow at a constant rate of 4.75 percent per year
indefinitely. The current rate of interest on risk-free asset is
2.51 percent, and the rate of return on market portfolio is 11.25
percent. L’arancia Company’s beta is estimated to be 1.09. What is
your estimate of the current market price of L’arancia Company’s
stock?