Question: The analyst expects that Wolf Solutions Inc. (WSI) will have earnings per share of $2 for the coming year. WSI plans to retain all of

The analyst expects that Wolf Solutions Inc. (WSI) will have earnings per share of $2 for the coming year. WSI plans to retain all of its earnings for the next three years. For the subsequent two years, the firm plans on retaining 50% of its earnings. It will then retain only 25% of its earnings from that point forward. Retained earnings will be invested in projects with an expected return of 20% per year. If WSI's equity cost of capital is 10%, then the price of a share of WSI's stock is closest to ________. Hint: growth rate in each year = return on retained earnings x retention ratio

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