Suppose That A Firm S Recent Earnings Per Share And Dividend Per Share Are 4 00 And 3 00 Respectively Both Are Expec 1 (29.08 KiB) Viewed 11 times
Suppose That A Firm S Recent Earnings Per Share And Dividend Per Share Are 4 00 And 3 00 Respectively Both Are Expec 2 (9.7 KiB) Viewed 11 times
Suppose that a firm's recent earnings per share and dividend per share are $4.00 and $3.00, respectively. Both are expected to grow at 8 percent. However, the firm's current P/E ratio of 21 seems high for this growth rate. The P/E ratio is expected to fall to 17 within five years. Compute the dividends over the next five years. (Do not round intermediate calculations. Round your answers to 3 decimal places.) Years First year Second year Third year Fourth year Fifth year Dividends Compute the value of this stock in five years. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price
Calculate the present value of these cash flows using a 10 percent discount rate. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value
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