Question
An analyst wishes to estimate the price of a stock and has gathered the following information: Current EPS: $10 Retention Ratio: 0.70 Beta: 2 Market
An analyst wishes to estimate the price of a stock and has gathered the following information:
Current EPS: $10
Retention Ratio: 0.70
Beta: 2
Market Risk Premium: 6%
Risk-Free: 3%
Growth rate of dividends: 4%
Yield on firm's 5 year bonds: 5.5%
What is the firm's price per share?
A. 28.36 B. 23.11 C. 27.27
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Investments
Authors: William F. Sharpe, Gordon J. Alexander, Jeffery V. Bailey
6th Edition
8120321014, 978-8120321014
