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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
23.  The Aldridge Co. is expected to grow at 6% into the indefinite future. Its latest annual dividend was $2.50. Treasury bills currently earn 7% and the S&P 500 yields 11%.
a. What price should Aldridge shares command in the market if its beta is 1.3?
b. Evaluate the sensitivity of Aldridge’s price to changes in expected growth and risk by recalculating the price while varying the growth rate between 5% and 7% (increments of 1%) and varying beta between 1.2 and 1.4 (increments of .1).
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