ASL Ltd's most recent earnings per share was $1.00 and it paid a dividend of $0.60 per
Question:
ASL Ltd's most recent earnings per share was $1.00 and it paid a dividend of $0.60 per share. You expect ASL to earn $1.10 and continue its payout ratio. Assume that you expect to sell the shares for $13.20 at the end of the year. If you require 12 per cent on the shares, how much would you be willing to pay for them today? If you expect a selling price of $11.00 and require an 8 per cent return on this investment, how much would you pay for the ASL's shares?
11. Over the long run, you expect dividends for ASL in Q10 to grow at 8 per cent and you require 11 per cent on the shares. Using the infinite period DDM, how much would you pay for ASL's shares?
Financial Accounting Tools for Business Decision Making
ISBN: 978-1118024492
5th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine