Next year, BHH Co. is expected to pay a dividend of $2.77 per share from earnings of

Question:

Next year, BHH Co. is expected to pay a dividend of $2.77 per share from earnings of $4.75 per share. The equity cost of capital for BHH is 12.1%. What should BHH’s forward P/E ratio be if its dividend growth rate is expected to be 4.3% for the foreseeable future?

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