ABC Waterhouse's free cash flow next year will be $250 million and it is widely expected to grow at a 5 percent annual rate indefinitely. The company's weighted average cost of capital is 11 percent, the market value of its liabilities is $2.5 billion, and it has 32 million shares outstanding.
Estimate the price per share of ABC's common stock.
a. $32.08
b. $52.08
c. $22.58
d. $25.85