Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

based of this question and what's given, what is the dividend payout rate and how do we get it? RIV model Consider a company with

image text in transcribed based of this question and what's given, what is the dividend payout rate and how do we get it?
RIV model Consider a company with the following financial information for the financial year ending 2018: The consensus analyst earnings per share forecasts for the next two years (2019 and 2020) are $4.29 and $4.78, respectively. In its 2018 annual report, the company reported earnings per share of $3.93, book value per share of $20.15, and dividends per share of $1.06. Assume that from 2021 to 2023, the company's earnings per share is expected to grow annually at 11% relative to 2020. The dividend payout ratio is expected to remain at its 2018 level. The cost of equity capital as of 2010 is 10%. The residual income (RI) will grow at 4% annual rate beyond the terminal year What is the share price of the company based off the Residual Income Valuation (RIV) model, as of the fiscal year end in 2018

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

Assurance And Auditing

Authors: Thomas Nelson

1st Edition

0170111342, 978-0170111348

More Books

Students also viewed these Accounting questions

Question

=+A1, A2 ,... such that A ,, has probability p ,.

Answered: 1 week ago

Question

b. Why were these values considered important?

Answered: 1 week ago