Im not understanding , the solution provided looks wrong, or I am wrong, particualrly EPS, Constant Growth YEARS 1 2 3 4 5 YEARS 1 2 3 4 5 BV Equity $ 50.00 $ 53.50 $ 57.25 $ 61.25 $ 65.54 Cost of Capital DIV PS $ 3.50 $ 3.75 $ 4.01 $ 4.29 $ 6.03 EPS (Net Income) $ 7.00 $ 7.49 $ 8.01 $ 8.58 $ 7.54 11.5% PV CF $ 3.14 $ 3.01 $ 2.89 $ 2.77 $ 3.50 ROE 14.0% 14.0% 14.0% 14.0% 11.5% TV $ 52.43 Payout Ratio 0.5 0.5 0.5 0.5 0.8 PV TV $ 30.42 DIV PS $ 3.50 $ 3.75 $ 4.01 $ 4.29 $ 6.03 Price $ 45.74 Growth of DIV 0% 7.0% 7.0% 7.0% 40.6%
Im not understanding , the solution provided looks wrong, or I am wrong, particualrly EPS, Constant Growth YEARS 1 2 3 4 5 YEARS 1 2 3 4 5 BV Equity $ 50.00 $ 53.50 $ 57.25 $ 61.25 $ 65.54 Cost of Capital DIV PS $ 3.50 $ 3.75 $ 4.01 $ 4.29 $ 6.03 EPS (Net Income) $ 7.00 $ 7.49 $ 8.01 $ 8.58 $ 7.54 11.5% PV CF $ 3.14 $ 3.01 $ 2.89 $ 2.77 $ 3.50 ROE 14.0% 14.0% 14.0% 14.0% 11.5% TV $ 52.43 Payout Ratio 0.5 0.5 0.5 0.5 0.8 PV TV $ 30.42 DIV PS $ 3.50 $ 3.75 $ 4.01 $ 4.29 $ 6.03 Price $ 45.74 Growth of DIV 0% 7.0% 7.0% 7.0% 40.6%
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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Question
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Im not understanding , the solution provided looks wrong, or I am wrong, particualrly EPS,
| Constant Growth | ||||||||||||||
| YEARS | 1 | 2 | 3 | 4 | 5 | YEARS | 1 | 2 | 3 | 4 | 5 | |||
| BV Equity | $ 50.00 | $ 53.50 | $ 57.25 | $ 61.25 | $ 65.54 | Cost of Capital | DIV PS | $ 3.50 | $ 3.75 | $ 4.01 | $ 4.29 | $ 6.03 | ||
| EPS (Net Income) | $ 7.00 | $ 7.49 | $ 8.01 | $ 8.58 | $ 7.54 | 11.5% | PV CF | $ 3.14 | $ 3.01 | $ 2.89 | $ 2.77 | $ 3.50 | ||
| 14.0% | 14.0% | 14.0% | 14.0% | 11.5% | TV | $ 52.43 | ||||||||
| Payout Ratio | 0.5 | 0.5 | 0.5 | 0.5 | 0.8 | PV TV | $ 30.42 | |||||||
| DIV PS | $ 3.50 | $ 3.75 | $ 4.01 | $ 4.29 | $ 6.03 | Price | $ 45.74 | |||||||
| Growth of DIV | 0% | 7.0% | 7.0% | 7.0% | 40.6% |
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