Question
The Wall Street Journal reported the price earnings (PE) ratio for XYZ stock to be 52. The annual dividends paid by the company were listed
The Wall Street Journal reported the price earnings (PE) ratio for XYZ stock to be 52. The annual dividends paid by the company were listed to be 0.92 and the closing price was listed to be US$31.625.
Assuming that the market believes that XYZ is a steady growth company, estimate the appropriate value of the rate of growth in dividends that would justify such as high PE ratio for XYZ? (6 marks)
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
