14) (6 pts) ABC company current stock price is $50. The most recent Earnings per Share...

 

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14) (6 pts) ABC company current stock price is $50. The most recent Earnings per Share reported was $3.00 (assume this EPS number was just reported yesterday). You expect the company's Earnings to increase by 10% next year and 6% the following year. In two years you are expecting the company's stock will trade at a P/E multiple of 22. Your required rate of return for ABC is 10%. If you expect the company to maintain a 30% dividend payout ratio, fill in the following information used to estimate the intrinsic value (you do not have to estimate the intrinsic value just fill in the blanks below) Yr. 1 EPS = Yr. 1 Div = Yr 2 EPS= Yr. 2 Div = Yr 2 Horizon Value= 14) (6 pts) ABC company current stock price is $50. The most recent Earnings per Share reported was $3.00 (assume this EPS number was just reported yesterday). You expect the company's Earnings to increase by 10% next year and 6% the following year. In two years you are expecting the company's stock will trade at a P/E multiple of 22. Your required rate of return for ABC is 10%. If you expect the company to maintain a 30% dividend payout ratio, fill in the following information used to estimate the intrinsic value (you do not have to estimate the intrinsic value just fill in the blanks below) Yr. 1 EPS = Yr. 1 Div = Yr 2 EPS= Yr. 2 Div = Yr 2 Horizon Value=

Answer rating: 100% (QA)

To estimate the intrinsic value of ABC Companys stock we need to calculate the future earnings ... View the full answer