ABC Corp. earned $2.50 per share this year, and it has a payout ratio of 35%. The
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Question:
ABC Corp. earned $2.50 per share this year, and it has a payout ratio of 35%. The beta for this stock is 1.0. Earnings and dividends have been growing at a constant rate of 11% per year, although analysts now estimate that the growth rate will be 9% a year for the indefinite future. The required rate of return for the market as a whole is 14%. What is the estimated price of this stock?
Select one:
a. $83.33
b. $54.50
c. $19.00
d. $17.50
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1259024962
6th Canadian edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim
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