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.