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please show all work and formulas 7. Benson Co., an all-equity firm, just reported EPS of $5.00 per share for 2020 year-end. Due to the
please show all work and formulas
7. Benson Co., an all-equity firm, just reported EPS of $5.00 per share for 2020 year-end. Due to the economic downturn, it decided to cut its dividend payout ratio to 20% in 2020 and also for next two years. Benson's CFO forecasts that the economy will make a turnaround by the end of 2023 so that the firm can fund its growth internally with 80% payout ratio. The firm is initiating a new investment that earns 15% return, which will account for all future earnings growth. Assume Benson Co.'s equity cost of capital is 10%. a. Estimate the firm's EPS in 2021, 2022, and 2023. b. What is the value of Benson's stock in 2022? c. What is the value of Benson's stock in 2020 Step by Step Solution
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