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A company has the following share price and EPS. 20x5 20x6 20x7 20x8 Earnings Per Share (cents) 44 52 51 68 Share Price (cents) 550

A company has the following share price and EPS.

20x5 20x6 20x7 20x8

Earnings Per Share (cents)

 44 52 51 68

Share Price

(cents)

 550 570 595 680

Assume that in 20x9, it does a 1:5 rights issue. As the money raised from the rights issue will not be used in the short term, the total profits in 20x9 just grows by the historical growth rates. The P/E ratio will also follows the average P/E from 20x5 to 20x8.

What is the expected share price?

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