Question: (O In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next

(O In practice, a common way to value a share of

(O In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the terminal stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.34. The dividends are expected to grow at 19 percent over the next five years. The company has a payout ratio of 45 percent and a benchmark PE of 22. The required return is 13 percent. 8 01:18:02 a. What is the target stock price in five years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b.What is the stock price today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) eBook 156.33 a. Target price in five years b. Stock price today 92.74

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