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Calculate current market price per share of bfg common share

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Reference no: EM132887448

The current date is January 1, 20X3.

  1. At the end of 20X3, Bio-Fuel Generation Inc. (BFG) will pay a dividend of $0.75, which increases by 8% in 20X4 and 6% in 20X5.
  2. Thereafter, the constant growth rate will be 3%.
  3. Based on market data, you have determined that the current risk-free rate is 3% and the expected market price of risk is 5%. You have estimated that the industry beta is 1.9.

Required:

Problem 1: Calculate the current market price per share of BFG's common shares.

Reference no: EM132887448

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