The earnings -per - share of Posi Tech Ltd (PTL) are forecast to be $7.50 in one year's time, then $ 7.75 in the following year and $ 8.00 in the third year, growing thereafter at 1.5% pa. PTL's retention ratio is 60%. The required rate of return on its shares is 14% pa. The estimated value of a PTL share is closest to: (A) $22.56 (B) $24.72 (C) $ 33.84 (D) $37.07

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
icon
Related questions
icon
Concept explainers
Topic Video
Question
The earnings - per- share of Posi
Tech Ltd (PTL) are forecast to be
$7.50 in one year's time, then $
7.75 in the following year and $
8.00 in the third year, growing
thereafter at 1.5% pa. PTL's
retention ratio is 60 % . The
required rate of return on its
shares is 14% pa. The estimated
value of a PTL share is closest to:
(A) $22.56 (B) $24.72 (C) $
33.84 (D) $37.07
Transcribed Image Text:The earnings - per- share of Posi Tech Ltd (PTL) are forecast to be $7.50 in one year's time, then $ 7.75 in the following year and $ 8.00 in the third year, growing thereafter at 1.5% pa. PTL's retention ratio is 60 % . The required rate of return on its shares is 14% pa. The estimated value of a PTL share is closest to: (A) $22.56 (B) $24.72 (C) $ 33.84 (D) $37.07
Expert Solution
steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Stock Valuation
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education