Question: 5. Chapter MC, Section 09, Problem 082.Algo Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its

5. Chapter MC, Section 09, Problem 082.Algo Church Inc. is presently enjoying

5. Chapter MC, Section 09, Problem 082.Algo Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e, g-0. The company's last dividend, Do, was $1.25, its beta is 1.30, the market risk premium is 5.50%, and the risk-free rate is 2.90 %. What is the current price of the common stock? Do not round intermediate calculations. a. $27.65 b. $28.90 c. $28.35 d. $30.43

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