Question: New Millennium Company s stock sells at a P E ratio of
New Millennium Company’s stock sells at a P/E ratio of 21 times earnings. It is expected to pay dividends of $2 per share in each of the next 5 years and to generate an EPS of $5 in year 5. Using the dividends-and-earnings model and a 12% discount rate, compute the stock’s justified price.
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