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Question 4 (8 points) Consider the following per-share numbers from the accounting reports of a firm 8% Cost of Capital LT Growth 3% 2021 1.6
Question 4 (8 points) Consider the following per-share numbers from the accounting reports of a firm 8% Cost of Capital LT Growth 3% 2021 1.6 2020 1.4 0.06 2022 2022 2.1 EPS DPS BPS 1.1 5.5 1.1 6.5 5 Estimate the price of the share at the end of year 2020 using 1. The forecast of just two period's earnings _(2 points) 2. Using AEG with a constant growth assumption beyond 2022 (2 points) 3. Using ROE _(2 points) 4. Compare your results and suggest which method seems more reasonable? Why? (2 points) Question 4 (8 points) Consider the following per-share numbers from the accounting reports of a firm 8% Cost of Capital LT Growth 3% 2021 1.6 2020 1.4 0.06 2022 2022 2.1 EPS DPS BPS 1.1 5.5 1.1 6.5 5 Estimate the price of the share at the end of year 2020 using 1. The forecast of just two period's earnings _(2 points) 2. Using AEG with a constant growth assumption beyond 2022 (2 points) 3. Using ROE _(2 points) 4. Compare your results and suggest which method seems more reasonable? Why? (2 points)
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