Question: Linear Technology is in the high tech industry 2 years from now, the company expects the earnings per share (EPS)of 10 and payout of 50%

Linear Technology is in the high tech industry

2 years from now, the company expects the earnings per share (EPS)of 10 and payout of 50% of earnings as a dividend.

Once profitable, earnings and dividends will grow at 15% for 5years (in years 3-7)

From year 8, growth will be perpetual at 4% If the required return is 20%, what are the shares currently worth?

$0.6

$0.37

$0.81

$0.10

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