# Question: Davis Inc currently has an EPS of 2 and an

Davis, Inc., currently has an EPS of $2 and an earnings growth rate of 8 percent. If the benchmark PE ratio is 22, what is the target share price five years from now?

**View Solution:**## Answer to relevant Questions

In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ratio. Suppose a ...Suppose a stock had an initial price of $72 per share, paid a dividend of $1.20 per share during the year, and had an ending share price of $79. Compute the percentage total return.Over a 40-year period an asset had an arithmetic return of 11.7 percent and a geometric return of 9.6 percent. Using Blume’s formula, what is your best estimate of the future annual returns over 5 years? 10 years? 20 years?Consider the following information:a. Your portfolio is invested 30 percent each in A and C, and 40 percent in B. What is the expected return of the portfolio?b. What is the variance of this portfolio? The standarddeviation?You want to create a portfolio equally as risky as the market, and you have $1,000,000 to invest. Given this information, fill in the rest of the followingtable:Post your question