Need help with this question solution general accounting Johnson's Manufacturing expects earnings per share of $3.25 next year.Current book value is $8.75 per share. The appropriate discount rate forJohnson's Manufacturing is 12 percent. Calculate the share price for Johnson'sManufacturing if earnings grow at 4.5 percent forever.

Step 1: Definition of Share Price Using the Gordon Growth ModelThe Gordon Growth Model (GGM) is used…

Answered: Johnson's Manufacturing expects…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 12P

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Johnson's Manufacturing expects earnings per share of $3.25 next year. Current book value is $8.75 per share. The appropriate discount rate for Johnson's Manufacturing is 12 percent. Calculate the share price for Johnson's Manufacturing if earnings grow at 4.5 percent forever.