McGaha Enterprises expects earnings and dividends to grow at a rate of 49% for the next 4 years, after the growth rate in earnings and dividends will fall to zero, i.e., g = 0. The company's last dividend, D₀, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?

Answer rating: 100% (QA)

The current price of the common stock can be calculated using the followi... View the full answer