Question
Turner plc is expected to earn 5.14 a share in the next year and projected to pay 36% of earnings as dividend. The CFO of
Turner plc is expected to earn 5.14 a share in the next year and projected to pay 36% of earnings as dividend.
The CFO of Turner plc has forecasted that the earnings would grow at 8.5% per year over the next 5 years.
Investors required rate of return from JB plc is 7.4% Required: a) Calculate the earnings and dividends of the next five years. (10 marks)
b) If the earnings growth rate falls to 4% in year 6 calculate the expected share price at the end of the year 5. (7 marks)
c) Calculate the value of the share of Turner plc today
Step by Step Solution
There are 3 Steps involved in it
Step: 1
a To calculate the earnings and dividends for the next five years we will use the given information and the assumption of 85 annual earnings growth ra...
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Step: 2
Step: 3
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Taxes And Business Strategy A Planning Approach
Authors: Myron Scholes, Mark Wolfson, Merle Erickson, Michelle Hanlon
5th Edition
132752670, 978-0132752671
