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You are trying to estimate the share price for UpStream Inc. You have forecasted the following information about earnings and payouts to shareholders rates for
You are trying to estimate the share price for UpStream Inc. You have forecasted the following information about earnings and payouts to shareholders rates for the next five years (see table below). In addition, you know that after year 5 the company will maintain a constant payout rate of 30% in perpetuity. The company's equity cost of capital (rE) is 16%, its return on new investment is 20%, and it currently has 250 million shares outstanding. Based on the information provided, estimate the share price. Select the best one. I. $68.93 II. $31.21 III. $4,818.69 IV. $19.27 V. $7.93
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