Vansel Inc. retains most of its profits. The company currently has earnings per share of $11. Vansel expects his earnings to grow at a constant rate of 2 percent per year. In addition, the average PE ratio of all other companies in Vansel's industry is 12. Vansel is expected to pay dividends per share of $3.50 for each of the next three years. If investors require a 10 percent rate of return on Vansel shares, a fair price for Vansel shares today is $____.?

Answer rating: 100% (QA)

To calculate the fair price for Vansel shares we can use the dividend discount model w... View the full answer