1.

Use the following information to determine the value of Buckhill common stock: I. Expected dividend payout ratio is 45%. II. Expected dividend growth rate is 6.5%. III. Required return is 12.4%. IV. Expected earnings per share next year are $3.25.

First, estimate the price to earnings (P/E) ratio as: (0.45) / (0.124 0.065) = 7.63. Then, multiply the expected earnings by the estimated P/E ratio: ($3.25)(7.63) = $24.80

Question 1 options:

	27.25
	30.12
	24.80