Due to the introduction of a new product line, earnings and dividends in company A are expected to grow at a rate of 12% for the next 3 years. After this period the firm is expected to resume growth at the industry average of 4% thereafter. The firm recently paid a dicident of $1 and the required return is 19%. What is the most you should pay for the company stock? a. $7.52 b. none of the listed items is correct c. $3.53 d. $8.44 e. $24.34
Due to the introduction of a new product line, earnings and dividends in company A are expected to grow at a rate of 12% for the next 3 years. After this period the firm is expected to resume growth at the industry average of 4% thereafter. The firm recently paid a dicident of $1 and the required return is 19%. What is the most you should pay for the company stock? a. $7.52 b. none of the listed items is correct c. $3.53 d. $8.44 e. $24.34
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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5. Due to the introduction of a new product line, earnings and dividends in company A are expected to grow at a rate of 12% for the next 3 years. After this period the firm is expected to resume growth at the industry average of 4% thereafter. The firm recently paid a dicident of $1 and the required return is 19%. What is the most you should pay for the company stock?
a. $7.52
b. none of the listed items is correct
c. $3.53
d. $8.44
e. $24.34
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