2B1I FRASIER PRODUCTS HAS BEEN GROWING AT A RATE OF 10% PER YEAR AND...
112.
CSO: 2B1f
LOS: 2B1i
Frasier Products has been growing at a rate of 10% per year and expects this growth to
continue and produce earnings per share of $4.00 next year. The firm has a dividend
payout ratio of 35% and a beta value of 1.25. If the risk-free rate is 7% and the return on
the market is 15%, what is the expected current market value of Frasier’s common stock?
a.
$14.00.
b.
$16.00.
c.
$20.00.
d.
$28.00.