Question
(1) You are evaluating shares in General Electric (GE). They just paid an annual dividend of $15.00 per share last year but have cut future
(1) You are evaluating shares in General Electric (GE). They just paid an annual dividend of $15.00 per share last year but have cut future dividends to $12.50 per share and do not expect those to grow in the future. If you use a discount rate of 12%, what is the value of the shares?
(2) You are evaluating shares in Telsa (TSLA) and comparing it to General Motors (GM). TSLA is trading at $250.00 per share, had EPS last year of $12.50 per share and is expected to have EPS which is 5% higher this year. GM is trading at $25.00 per share, had EPS last year of $1.50 per share and is expected to have EPS which is 2% higher this year. You believe that TSLA mature and should trade at the same forward P/E as GM. Assuming you are right, compute TSLAs expected stock price.
These HW question gave me trouble, any help?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started