Investors have invested $25,000 in common equity in a company.The investors expect that the company will reinvest all income back into projects.The company is forecasted to earn $6,000 the first year,$5,000 the second year,$5,500 the third year,and $6,244 each year after the third year.The company's current stock price is $17 per share.Assuming that the company has 3,200 shares outstanding and the risk-free rate of interest is 6%,calculate the price differential for this company.

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The Answer of Investors have invested $25,000 in common equity in a company.The investors expect that the company will reinvest all income back into projects.The company is forecasted to earn $6,000 the first year,$5,000 the second year,$5,500 the third year,and $6,244 each year after the third year.The company's current stock price is $17 per share.Assuming that the company has 3,200 shares outstanding and the risk-free rate of interest is 6%,calculate the price differential for this company.

Investors Have Invested $25,000 in Common Equity in a Company