Question: ABC Corp. earned $2.50 per share this year, and it has a payout ratio of 35%. The beta for this stock is 1.0. Earnings and

ABC Corp. earned $2.50 per share this year, and it has a payout ratio of 35%. The beta for this stock is 1.0. Earnings and dividends have been growing at a constant rate of 11% per year, although analysts now estimate that the growth rate will be 9% a year for the indefinite future. The required rate of return for the market as a whole is 14%. What is the estimated price of this stock?

Select one:

a. $83.33

b. $54.50

c. $19.00

d. $17.50

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