# Question

Fincorp will pay a year-end dividend of $2.40 per share, which is expected to grow at a 4%

rate for the indefinite future. The discount rate is 12%.

a. What is the stock selling for?

b. If earnings are $3.10 a share, what is the implied value of the firm’s growth opportunities?

Dividend per share...$2.40

Expected growth rate ...400%

Discount rate .......12.00%

Earnings per share... (b)$3.10

rate for the indefinite future. The discount rate is 12%.

a. What is the stock selling for?

b. If earnings are $3.10 a share, what is the implied value of the firm’s growth opportunities?

Dividend per share...$2.40

Expected growth rate ...400%

Discount rate .......12.00%

Earnings per share... (b)$3.10

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