Laurel Enterprises expects earnings next year of $3.84 per share and has a 50% retention rate, which

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Laurel Enterprises expects earnings next year of $3.84 per share and has a 50% retention rate, which it plans to keep constant. Its equity cost of capital is 9%, which is also its expected return on new investment. Its earnings are expected to grow forever at a rate of 4.5% per year. If its next dividend is due in one year, what do you estimate the firm’s current stock price to be?

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Fundamentals Of Corporate Finance

ISBN: 9781292437156

5th Global Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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