The current date is January 1, 20X3.

• At the end of 20X3, Bio-Fuel Generation Inc. (BFG) will pay a dividend of $0.75, which increases by 8% in 20X4 and 6% in 20X5.

• Thereafter, the constant growth rate will be 3%.

• Based on market data, you have determined that the current risk-free rate is 3% and the expected market price of risk is 5%. You have estimated that the industry beta is 1.9.



Required: Calculate the current market price per share of BFG's common shares.

Answer rating: 100% (QA)

To calculate the current market price per share of BFGs common shares we can use the dividend discou... View the full answer