Question
Black Hole Inc (BHI), a telescope manufacturer located in southern California, just reported earnings per share (EPS) today of $2.00 and is expected to grow
Black Hole Inc (BHI), a telescope manufacturer located in southern California, just reported earnings per share (EPS) today of $2.00 and is expected to grow its earnings by 15% per year for the next three years. After which, their earnings growth will settle down to 5% per year. The CFO of BHI just announced that the firm will never pay a single dividend to any of its shareholders. The management team is fully entrenched and there is no chance of a successful takeover. If investors demand a 12% return, what is the price of BHI's stock?
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Intermediate Accounting
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
1st edition
978-0133251579, 133251578, 013216230X, 978-0134102313, 134102312, 978-0132162302
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