You have the following information for company: Current level of earnings per share (EPS) is $4.00.
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Question:
You have the following information for company:
• Current level of earnings per share (EPS) is $4.00.
• Long-term policy of retaining 30% of its earnings.
• Return on reinvested funds is 12%
• Investor's required rate of return for similar firms is 10%.
• The shares of comparable firms sell at P/E multiples of 12 times forward (i.e., projected period 1) earnings per share.
Using the constant growth dividend model, calculate the price per share of the company's stock
Related Book For
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
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