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What is a reasonable valuation to place on Franklin Co stock

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Question - Franklin Co. paid dividends per share of $0.48 in 2021. The firm is expected to report earnings growth of 25% in 2022, after which the growth rate is expected to decline linearly over the following six years until it hits 5% in 2027 when growth becomes constant. The stock is expected to have a beta of 0.85, while the Treasury rate is 6.25% and the risk premium on the market is 5.5%. What is a reasonable valuation to place on Franklin Co.'s stock?

Reference no: EM133045462

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