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Ricks Department Stores has had the following pattern of earnings per share over the last five years: Year Earnings per Share 2008 $ 4.00 2009
Ricks Department Stores has had the following pattern of earnings per share over the last five years: | |||||||
Year | Earnings per Share | ||||||
2008 | $ 4.00 | ||||||
2009 | 4.20 | ||||||
2010 | 4.41 | ||||||
2011 | 4.63 | ||||||
2012 | 4.86 | ||||||
The earnings per share have grown at a constant rate (on a rounded basis) and will continue to do so in the future. Dividends represent 40 percent of earnings. | |||||||
a. Project earnings and dividends for the next year (2013). Round all values in this problem to two places to the right of the decimal point. | |||||||
b. If the required rate of return is 13 percent, what is the anticipated share price at the beginning of 2013? |
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