Question
Next year ABC's EPS is expected to be $4. The firm is not expected to pay any dividends for the next THREE years. In year
Next year ABC's EPS is expected to be $4. The firm is not expected to pay any dividends for the next THREE years. In year 4, a dividend of $2 is expected and subsequent dividends are expected to grow at 5 percent per year. Assume that the cost of capital for the firm is 13 percent.
a. What should be the current share price of ABC Inc.?
b. What is the PVGO of ABC Inc?
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Multinational Business Finance
Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett
14th edition
133879879, 978-0133879872
