Question
Scott Companies stock is valued correctly in the market today at $16.00 per share. They are expected to have earnings of $2.00 per share over
Scott Companies stock is valued correctly in the market today at $16.00 per share. They are expected to have earnings of $2.00 per share over the next year. Investors expect earnings and dividends to grow by 7% and to continue to grow at 7% forever. The firm has a policy of always paying out 60% of their earnings in dividends each year. How much value per share is being added or destroyed by the retention and reinvestment of earnings compared to the no-growth value of the firm.
Provide the No Growth Stock Value and the value added per share below.
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Financial Accounting The Impact On Decision Makers
Authors: Gary A Porter, Curtis L Norton
8th Edition
1111534861, 9781111534868
