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What is current share price

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Problem 1: A stock is expected to pay no dividends for the first three years, that is, D1 = P0, D2 = P0, and D3 = P0. The dividend for Year 4 is expected to be P5.00, and it is anticipated that the dividend will grow at a constant rate of 8% a year thereafter. The risk-free rate is 4%, the market risk premium is 6%, and the stock's beta is 1.5. Assuming the share is fairly priced, what is its current share price?

a. P 79.38

b. P 69.31

c. P 86.38

d. P 72.96

Reference no: EM132787169

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