Question
Calculate the value of the following two stocks: Acorn tech and Lime media acorn has reported earnings per share of 80p and has a dividend
Calculate the value of the following two stocks: Acorn tech and Lime media
acorn has reported earnings per share of 80p and has a dividend payout of 40% and the dividend has just been paid. Acorn weighted average cost of capital is 9% and they have 25% debt in their capital structure. The tax rate is 30%. Acorns dividend are growing at 4% per year.
Lime has grown its dividend steadily over the years. In 2010 was 8p and in 2020 it was 19p. The company faced a tax rate of 30% as well, the risk free rate of interest was 2% and the market premium was 6%. Lime has no debts and its beta is 1.8. Its payout ratio is lower at 30%.
what are the share prices of Acorn and Lime?
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