Justin Cement Company has had the following pattern of earnings per share over the last five years:
Question:
YearEarnings per Share
2006 ............. $5.00
2007 ............5.30
2008 ............5.62
2009 ............5.96
2010 ............6.32
The earnings per share have grown at a constant rate (on a rounded basis) and will continue to do so in the future. Dividends represent 40 percent of earnings. Project earnings and dividends for the next year (2011).
If the required rate of return (Ke) is 13 percent, what is the anticipated stock price (P0) at the beginning of 2011?
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Related Book For
Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
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