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Justin Cement Company has had the following pattern of earnings per share over the last five years: Earnings per Share Year 20X1 $ 13.00 20X2 13.65 20X3 14.33 20X4 20X5 15.05 15.80 The earnings per share have grown at a constant rate (on a rounded basis) and will continue to do so in the future. Dividends represent 40 percent of earnings. a. Project earnings and dividends for the next year (20X6). Note: Round the growth rate to the nearest whole percent. Do not round any other intermediate calculations. Round your answers to 2 decimal places. Earnings Dividend 20X6 b. If the required rate of return (Ke) is 13 percent, what is the anticipated stock price (Po) at the beginning of 20X6? Note: Round the growth rate to the nearest whole percent. Do not round any other intermediate calculations. Round your answer to 2 decimal places. Anticipated stock price

Justin Cement Company has had the following pattern of earnings per share over the last five years: Earnings per Share Year 20X1 $ 13.00 20X2 13.65 20X3 14.33 20X4 20X5 15.05 15.80 The earnings per share have grown at a constant rate (on a rounded basis) and will continue to do so in the future. Dividends represent 40 percent of earnings. a. Project earnings and dividends for the next year (20X6). Note: Round the growth rate to the nearest whole percent. Do not round any other intermediate calculations. Round your answers to 2 decimal places. Earnings Dividend 20X6 b. If the required rate of return (Ke) is 13 percent, what is the anticipated stock price (Po) at the beginning of 20X6? Note: Round the growth rate to the nearest whole percent. Do not round any other intermediate calculations. Round your answer to 2 decimal places. Anticipated stock price

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Justin Cement Company has had the following pattern of earnings per share over the last five years: Earnings per Share Year 20X1 $ 13.00 20X2 13.65 20X3 14.33 20X4 20X5 15.05 15.80 The earnings per share have grown at a constant rate (on a rounded basis) and will continue to do so in the future. Dividends represent 40 percent of earnings. a. Project earnings and dividends for the next year (20X6). Note: Round the growth rate to the nearest whole percent. Do not round any other intermediate calculations. Round your answers to 2 decimal places. Earnings Dividend 20X6 b. If the required rate of return (Ke) is 13 percent, what is the anticipated stock price (Po) at the beginning of 20X6? Note: Round the growth rate to the nearest whole percent. Do not round any other intermediate calculations. Round your answer to 2 decimal places. Anticipated stock price
Transcribed Image Text:Justin Cement Company has had the following pattern of earnings per share over the last five years: Earnings per Share Year 20X1 $ 13.00 20X2 13.65 20X3 14.33 20X4 20X5 15.05 15.80 The earnings per share have grown at a constant rate (on a rounded basis) and will continue to do so in the future. Dividends represent 40 percent of earnings. a. Project earnings and dividends for the next year (20X6). Note: Round the growth rate to the nearest whole percent. Do not round any other intermediate calculations. Round your answers to 2 decimal places. Earnings Dividend 20X6 b. If the required rate of return (Ke) is 13 percent, what is the anticipated stock price (Po) at the beginning of 20X6? Note: Round the growth rate to the nearest whole percent. Do not round any other intermediate calculations. Round your answer to 2 decimal places. Anticipated stock price
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