Question
Justin Cement Company has had the following pattern of earnings per share over the last five years: Year Earnings Per Share 20X1 $ 8.00 20X2
Justin Cement Company has had the following pattern of earnings per share over the last five years:
| Year | Earnings Per Share | ||
| 20X1 | $ | 8.00 | |
| 20X2 | 8.48 | ||
| 20X3 | 8.99 | ||
| 20X4 | 9.53 | ||
| 20X5 | 10.10 | ||
|
| |||
The earnings per share have grown at a constant rate (on a rounded basis) and will continue to do so in the future. Dividends represent 40 percent of earnings. a. Project earnings and dividends for the next year (20X6). (Round the growth rate to the nearest whole percent. Do not round any other intermediate calculations. Round your answers to 2 decimal places.)
b. If the required rate of return (Ke) is 13 percent, what is the anticipated stock price (P0) at the beginning of 20X6?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
The FinTech Book The Financial Technology Handbook For Investors Entrepreneurs And Visionaries
Authors: Susanne Chishti, Janos Barberis
1st Edition
111921887X, 9781119218876
