Extruded Elements had Net Income of $25,000,000 last year, and $26,250,000 this year (in line with its long-term earnings growth rate). There are 4,000,000 shares outstanding, and the firm follows a policy of paying 30% of its earnings out as dividends, the required rate of return on extruded's shares is 13%. What is the share price today based on the Gordon growth model?
Extruded Elements had Net Income of $25,000,000 last year, and $26,250,000 this year (in line with its long-term earnings growth rate). There are 4,000,000 shares outstanding, and the firm follows a policy of paying 30% of its earnings out as dividends, the required rate of return on extruded's shares is 13%. What is the share price today based on the Gordon growth model?
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 8P
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Transcribed Image Text:Extruded Elements had Net Income of $25,000,000 last
year, and $26,250,000 this year (in line with its long-term
earnings growth rate). There are 4,000,000 shares
outstanding, and the firm follows a policy of paying 30%
of its earnings out as dividends, the required rate of
return on extruded's shares is 13%.
What is the share price today based on the Gordon
growth model?
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