Question

Assume you obtain the following information about Wild Amusement​ Park:

LOADING...

. Use the​ constant-growth DVM to place a value on this​ company's stock.

The value of this​ company's stock is

​$nothing.

​(Round to the nearest​ cent.)

Data provided below

Total assets   $67,000,000
Total equity   $28,730,968
Net income   $3,683,635
EPS   $5.57
Dividend payout ratio   36%
Required return   11.5%

Answer 1

- Return on equity(ROE) = Net income/Total equity = $3,683,635/$28,730,968

ROE = 12.8211%

Growth rate = ROE*(1-Dividend payout ratio)

Growth rate = 12.8211*(1-0.36)

Growth rate(g)= 8.21%

- Dividend Per share(D0) = EPS*Dividend payout ratio = $5.57*36%

D0 = $2.0052

Required return(ke) = 1.5%

Calculating the value of STock:-

P0 = $65.95

So, The value of this​ company's stock is ​$65.95

If you need any clarification, you can ask in comments.    

If you like my answer, then please up-vote as it will be motivating