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DALMA Corporation reported a book value for its 567.20 million common shares of $9,075.2 million on December 31, 2020. Analysts are forecasting EPS of $3.00
DALMA Corporation reported a book value for its 567.20 million common shares of $9,075.2 million on December 31, 2020. Analysts are forecasting EPS of $3.00 for 2021, $3.50 for 2022, $4.00 for 2023, and $4.25 for 2024. The indicated Retention Ratio is 60%. NELMA Corporation has debt of $100,000, equity of $150,000, a cost of debt of 5%, a cost of equity of 10%, and a tax rate of 40%. Analysts are predicting the residual earnings to grow at 4% after 2024. Required: If you paid $68.02 per share at the beginning of 2021, do you think that you over paid or underpaid? Explain and show calculations
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