Question
Assume that you have the following information:- Real rate of interest = 2.0%; Expected Inflation = 3.0%; Required return on the Market = 12.0%; EPS
Assume that you have the following information:- Real rate of interest = 2.0%; Expected Inflation = 3.0%; Required return on the Market = 12.0%; EPS = $2.0; Dividend pay-out ratio = 30.0%; Growth rate in EPS & Dividends per share = 5.0% (constant); Industry P/E multiple is 12; .
Answer the following questions:- 1 - The Required or Expected return on the stock is??? 2 - Next year's dividends per share (D1) is ???? 3 - According to the "Constant Growth" model; the current stock price is ??? 4 - According to the P/E multiple, the stock price is ???
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