The Framingham Company expects to grow at 4% indefinitely. Economists are currently asserting that investment opportunities in

Question:

The Framingham Company expects to grow at 4% indefinitely. Economists are currently asserting that investment opportunities in short-term government securities (Treasury bills) are readily available at a risk-free rate of 5%. The stock market is returning an average rate of 9%. Framingham’s beta has recently been calculated at 1.4. The firm recently paid an annual dividend of $ 1.68 per share. At what price should shares of Framingham stock be selling?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...