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solve this please 3. ( 15%) Small Fry, Inc., has just invented a potato chip that looks and tastes like a french fry. Given the
solve this please
3. ( 15%) Small Fry, Inc., has just invented a potato chip that looks and tastes like a french fry. Given the phenomenal market response to this product, Small Fry is reinvesting all of its eamings to expand its operations. Eamings were $6 per share this past yearand are expected to grow at a rate of 20% per year until the end of year 3. At that point, other companies are likely to bring out competing products. Analysts project that at the end of year 3, Small Fry will cut its investment and begin paying 80% ofits earnings as dividends. Its growth will also slow to a long-run rate of5%. If Small Fry s equity cost of capital is 10%, what is the value of a share todayStep by Step Solution
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