What should be current ordinary stock price

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Problem 1: Villar Subdivision Inc. is presently in a stage of abnormally high growth because of a surge in the demand for subdivisions. The company expects earnings and dividends to grow at a constant rate of 20 percent for the next 4 years, after which time there will be no growth or 0% in earnings and dividends. The Villar Subdivision Inc.'s last dividend was P1.50. Villar Subdivision Inc.'s beta is 1.6, the market return is currently 12.75%, and the market risk premium is 8.75%. What should be the current ordinary stock price?

a. P15.17

b. P22.21

c. P17.28

d. P19.10

Reference no: EM132787168

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