Question: Fincorp will pay a year end dividend of 2 40 per share

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

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  • CreatedSeptember 19, 2013
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