Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Justin Cement Company hashad 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

Justin Cement Company hashad 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.)

Earnings__________

Dividend__________

b.If the required rate of return (Ke) is 13 percent, what is the anticipated stock price (P0) at the beginning of 20X6?(Round the growth rate to the nearest whole percent. Do not round any other intermediate calculations. Round your answer to 2 decimal places.)

Anticipated stock price__________

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

Intermediate Accounting

Authors: J. David Spiceland, James Sepe, Lawrence A. Tomassini

4th Edition

0072994029, 9780072994025

More Books

Students also viewed these Accounting questions

Question

Create a Fishbone diagram with the problem being coal "mine safety

Answered: 1 week ago

Question

How easy the information is to remember

Answered: 1 week ago

Question

The personal characteristics of the sender

Answered: 1 week ago