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Matt is considering buying shares in the GamingStop Corporation and knows the following details about GamingStop: It had earnings per share (EPS) of $3 this
Matt is considering buying shares in the GamingStop Corporation and knows the following details about GamingStop:
- It had earnings per share (EPS) of $3 this year and just paid its first dividend.
- It expects its EPS to grow at 19% per year for the next five years and 5% per year after year 5.
- It intends to pay out 10% of its earnings as dividends until the end of year 5 and 55% of its earnings as dividends starting year 6.
Assuming, the appropriate equity cost of capital is 10%, what is the value of a GamingStop share today?
Answer in $ and include two decimal places.
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