What is the value of a share of antiair today

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Problem 1: Antiair drugs, a small pharmaceutical company, develops a vaccine and it is expected they will have high growth over the next three years. It plans to reinvest all of its earnings into expanding the company. Earnings were $1.20 per share before the development of the vaccine and are expected to grow by 40% per year for the next three years. After this time, it is expected growth will drop to 5% and stay there for the expected future. Four years from now Antiair will pay dividends that are 75% of its earnings. If its equity cost of capital is 10%, what is the value of a share of Antiair today?

A) $54.45
B) $52.00
C) $38.96
D) $48.30
E) $33.33

Reference no: EM132965269

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