Question

A stock currently has $10 EPS. Analysts estimate EPS may grow at 20% per year over...

A stock currently has $10 EPS. Analysts estimate EPS may grow at 20% per year over the next five years. What is the estimated stock price in five years if an investor thinks the stock will then sell for a 10 P/E ratio?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Working Note:

Year EPS
1 $10.00
2 $12.00
3 $14.40
4 $17.28
5 $20.74

Since EPS is growing every year therefore in 5th year it would be $20.74

I hope this clear your doubt.

Feel free to comment if you still have any query or need something else. I'll help asap.

Do give a thumbs up if you find this helpful.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Company FFF’s most recent EPS IS $5.00 per share. Your expect the company will increase EPS...
Company FFF’s most recent EPS IS $5.00 per share. Your expect the company will increase EPS by 10% next year and 8% the following year. You also expect that Company FFF will sell at a P/E multiple (tm) of 24 in 2 years. The company is expected to pay out 20% of earnings as a dividends and the required rate of retueb for FFF is 9%? a) What is your estimate for Earnings per Share over thr next two years?...
Ramsay Corp. currently has an EPS of $3.10, and the market seems to price the stock...
Ramsay Corp. currently has an EPS of $3.10, and the market seems to price the stock with a PE ratio of 21. Given this information, you expect the stock price today to be $______ . Your team of analysts research the firm and believe that Ramsay will grow earnings at 6% per year. Therefore, your team sets a target price of $______ per share in one year.
Colgate-Palmolive Company has just paid an annual dividend of $1.06. Analysts are predicting an 10.7% per...
Colgate-Palmolive Company has just paid an annual dividend of $1.06. Analysts are predicting an 10.7% per year growth rate in earnings over the next five years. After​ that, Colgate's earnings are expected to grow at the current industry average of 5.3% per year. If​ Colgate's equity cost of capital is 9.4% per year and its dividend payout ratio remains​ constant, for what price does the DDM predict Colgate stock should​ sell?
Solar Energy currently (Year 0) has Earnings Per Share (EPS) of $3 and pays no dividend....
Solar Energy currently (Year 0) has Earnings Per Share (EPS) of $3 and pays no dividend. You anticipate that EPS will grow at a 20% annual rate for the next three years (Years 1, 2 and 3) and then beginning in Year 4 EPS will grow at a constant 5% rate. You project the company will pay dividends of $0.25 per share (Year 1), $0.50 (Year 2), and $0.75 (Year 3). Beginning in Year 4 you anticipate Solar Energy will...
Assume Highline Company has just paid an annual dividend of $ 1.07. Analysts are predicting an...
Assume Highline Company has just paid an annual dividend of $ 1.07. Analysts are predicting an 11.5 % per year growth rate in earnings over the next five years. After? then, Highline's earnings are expected to grow at the current industry average of 5.2 % per year. If? Highline's equity cost of capital is 7.9 % per year and its dividend payout ratio remains? constant, for what price does the? dividend-discount model predict Highline stock should? sell? the value of...
Assume Highline Company has just paid an annual dividend of $0.93. Analysts are predicting an 11.3%...
Assume Highline Company has just paid an annual dividend of $0.93. Analysts are predicting an 11.3% per year growth rate in earnings over the next five years. After​ then, Highline's earnings are expected to grow at the current industry average of 5.7% per year. If​ Highline's equity cost of capital is 9.4% per year and its dividend payout ratio remains​ constant, for what price does the​ dividend-discount model predict Highline stock should​ sell? The value of​ Highline's stock is ​$
Ridgeway Construction has an EPS of $5.46. If the earnings are expected to grow at 4.5%...
Ridgeway Construction has an EPS of $5.46. If the earnings are expected to grow at 4.5% per year and the benchmark PE for the company is 18. What is estimated current stock price? What should the target stock price be in three years?
A firm just paid a $10 per share dividend, and the stock currently sells for $100...
A firm just paid a $10 per share dividend, and the stock currently sells for $100 per share. Dividends are expected to grow at a 10% annual rate for the next five years. What price must you be able to sell the stock for at the end of the 5 years in order for the stock to be fairly valued based on a 15% cost of equity?
Assume Highline Company has just paid an annual dividend of $ 1.09 . Analysts are predicting...
Assume Highline Company has just paid an annual dividend of $ 1.09 . Analysts are predicting an 11.1 % per year growth rate in earnings over the next five years. After​ then, Highline's earnings are expected to grow at the current industry average of 5.6 % per year. If​ Highline's equity cost of capital is 7.6% per year and its dividend payout ratio remains​ constant, for what price does the​ dividend-discount model predict Highline stock should​ sell? The value of​...
Assume Highline Company has just paid an annual dividend of $ 1.07. Analysts are predicting an...
Assume Highline Company has just paid an annual dividend of $ 1.07. Analysts are predicting an 11.2 % per year growth rate in earnings over the next five years. After​ then, Highline's earnings are expected to grow at the current industry average of 4.9 % per year. If​ Highline's equity cost of capital is 9.3 % per year and its dividend payout ratio remains​ constant, for what price does the​ dividend-discount model predict Highline stock should​ sell? The value of​...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT