What is the current price of the common stock

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Reference no: EM131020548

McGaha Enterprises expects earnings and dividends to grow at a rate of 25% for the next 4 years, after the growth rate in earnings and dividends will fall to zero, i.e., g = 0. The company's last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the current price of the common stock?

a. $27.89

b. $29.05

c. $31.42

d. $30.21

e. $26.09

Reference no: EM131020548

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