Osseo Operations recently paid an annual dividend of $4 per share. Earnings for the same year were

Question:

Osseo Operations recently paid an annual dividend of $4 per share. Earnings for the same year were $8 per share. The required return on stocks with similar risk is 11%. Dividends are expected to grow 6% per year indefinitely. Calculate Osseo's "normal" price-earnings ratio.
Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Fundamentals of Investments

ISBN: 978-0132926171

3rd edition

Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey

Question Posted: