Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

5 points You are trying to estimate the share price for UpStream inc. You have forecasted the following information about earnings and payouts to shareholders

image text in transcribed
5 points You are trying to estimate the share price for UpStream inc. You have forecasted the following information about earnings and payouts to shareholders rates for the next five years (see table below). In addition, you know that after year 5 the company wil maintain a constant payout rate of 30% in perpetuity. The company's equity cost of capital ( r, ) is 16%, its return on new investment is 20%, and it currently has 250 milion shares outstanding. Based on the information provided, estimate the share price. Select the best one. 1.568 .93 11,$10.27 ii.. $7.03 N. 54,818.69 v. $31.21

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Richard Stanton

2nd Edition

1519662106, 978-1519662101

More Books

Students also viewed these Finance questions

Question

FILL IN TABLE ON THE LEFT AND SHOW ANY WORKINGS REQUIRED

Answered: 1 week ago

Question

Why We Listen?

Answered: 1 week ago