LeAnn Inc. currently has earnings of $12 per share, and investors expect that the earnings per share will grow by 2.5 percent per year. Furthermore, the mean PE ratio of all other firms in the same industry as LeBlanc Inc. is 12. LeAnn is expected to pay a dividend of $2 per share over the next three years, and an investor in LeAnn Inc. requires a return of 10 percent. Based on the information provided, the forecasted stock price of LeAnn Inc. today, using the adjusted dividend discount model is $123.97?

a. True

b. False

Explanation