Super-Thrift Pharmaceuticals Company traditionally pays an annual dividend equal to 50% of its earnings. Earnings this year

Question:

Super-Thrift Pharmaceuticals Company traditionally pays an annual equal to 50% of its earnings. Earnings this year are $30,000,000. The company has 15 million shares outstanding. Investors expect earnings to grow at a 5% annual rate in perpetuity, and they require a return of 12% on their shares.
a. What is Super-Thrift’s current per share? What is it expected to be next year?
b. Use the Gordon growth model (see Equation 5.4) to calculate Super-Thrift’s stock price today.
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...