Question
OzU-Al has a market price of 200 per share, and has just paid a dividend of 10 . Its EPS (earnings per share) in
OzU-Al has a market price of 200 per share, and has just paid a dividend of 10 . Its EPS (earnings per share) in the past year is 20 , and EPS growth rate is expected to be 10%, the dividend growth rate is expected to be 8% per year. According to the constant growth DDM Model, what should be the price of OzU-Al if its expected rate of return is 20%? Is it undervalued or overvalued? You are planning to hold the stock for 2 years because you expect that the price of stock at that time will be aligned with industry average P/E ratio of 10. According to the Present Value Model, what should be the present value of OzU-AI?
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
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