Correct price of burger records common stock

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Reference no: EM132417225

You have just learned that Burger Records has purchased the lifetime distribution rights to the music of a new band called The French Fries.

Based upon this good news, you've estimated that Burger Records should earn $4.50 in profits per share next year.

You also think that future profits should increase by 3.9% a year indefinitely.

As a knowledgeable investor, you've determined that your required rate of return on an investment in Burger Records is 14.5%.

  1. Estimate, via a calculation, the correct price of Burger Records common stock.
  2. Estimate, via calculation, the correct price of the stock if you did not anticipate any increase in profits over time

Reference no: EM132417225

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