Assume that the risk-free rate of interest

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Valuation

Harrison Corporation is interested in acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 3% and the market risk premium is 7%.

Van Buren currently expects to pay a year-end dividend of $1.85 a share (D1 = $1.85). Van Buren's dividend is expected to grow at a constant rate of 5% a year, and its beta is 0.5. What is the current price of Van Buren's stock? Round your answer to the nearest cent.

Reference no: EM13849060

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