At the end 2011 you are expected to determine the marine's incs stock price. the expected eps for 2012 is 2,50$ and the equity cost of capital is 11%.

a. if the company decides to use 70% of its earnings of 2012 to finance new projects with an expected return of 8,5%, which will be the price of the marine's share?

b. assume instead that the company could invest in 2 projects. to undergo the first one, 40% of its eps in 2012 will be used, determining a constant and permanent increase of subsequent eps of 0,35$.

c. assume that the marine's stock price in 2011 is $21,50 and that the company plans to pay dividends for 40% of its earnings each year forever. which will be the roe expected by the market and coherent with the invested earnings?

Answer rating: 100% (QA)

Quiz 1 The price of the stock will be 3950 This is because the expected EPS for 2012 is 250 a... View the full answer