What is the price of bad company''s stock

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BAD company is expected to generate $8 earnings every period from t=1 on. The return on equity is 10%. At t=5, the firm has an opportunity to investment in a new project. The new project needs the fifirm to pay $5 at t=5, and it will generate $0.45 profifit from t=6 on forever. At t=7, the firm has another opportunity that costs $3 at t=7 and generates $0.45 from t=8 on forever. The discount rate r = 10%. What is the price of BAD company's stock?

Reference no: EM133072852

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