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XYZ Company has the following data: 1995 1996 Abnormal earnings -$15 $10 XYZ Company has a book value of $100 per share at the beginning
XYZ Company has the following data:
1995 1996
Abnormal earnings -$15 $10
XYZ Company has a book value of $100 per share at the beginning of 1995 and its cost of capital is 8%. After 1996, abnormal earnings will grow by 5% per year.
The estimated stock price at the beginning of 1995 using the abnormal earnings model is
| A. | $395 | |
| B. | $423 | |
| C. | $445 | |
| D. | $473 |
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