Andy’s Bottle Depot (ABD) has the following pattern of EPS for the previous 4 years

Year Earnings per Share
2019  1.50
2020  1.73
2021  1.98
2022   2.28
The earnings per share have grown at a constant rate and are expected to continue this pattern in the future. Corporate policy is to pay 20% of earnings as dividends each year, at the end of each year. If the required rate of return is now 19%, what is the estimated share price at the beginning of 2023? .

Answer rating: 100% (QA)

To estimate the share price at the beginning of 2023 we need to calculate the future dividends and d... View the full answer