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What is the fair value of the stock today

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Reference no: EM133180625

Question - You are trying to value the stock of Jimmy's Bikes. Jimmy's Bikes is a growing company that will not pay dividends for a few years. You expect to receive a dividend of $5 in two years, $6 in three years and then the dividend will grow by 5% forever. If the beta of Jimmy's Bikes is 1.5, the expected return on the market is 10%, and the risk-free rate is 3%, what is the fair value of the stock today?

a. 58.68 

b. 12.29 

c. 82.10 

d. 50.35

Reference no: EM133180625

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