Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bills Bakery expects earnings per share of $2.26 next year. Current book value is $4 per share. The appropriate discount rate for Bills Bakery is

Bills Bakery expects earnings per share of $2.26 next year. Current book value is $4 per share. The appropriate discount rate for Bills Bakery is 14 percent. Calculate the share price for Bills Bakery if earnings grow at 3.2 percent forever. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Share price= $

ps: tried and got 20.93 which is wrong .

plaease explaing how to calculate it

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

The Finance Book

Authors: Stuart Warner, Si Hussain

2nd Edition

1292401982, 978-1292401980

More Books

Students also viewed these Finance questions