Compute the dividends over the next five years

Assignment Help Financial Management

Reference no: EM132062034

P/E Model and Cash Flow Valuation

Suppose that a firm’s recent earnings per share and dividend per share are $2.50 and $1.30, respectively. Both are expected to grow at 8 percent. However, the firm’s current P/E ratio of 22 seems high for this growth rate. The P/E ratio is expected to fall to 18 within five years.

Compute the dividends over the next five years. (Do not round intermediate calculations and round your final answers to 3 decimal places.)

Dividends years

First year $ ?

Second year $ ?

Third year $ ?

Fourth year $ ?

Fifth year $ ?

Compute the value of this stock in five years. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Stock price $ ?

Calculate the present value of these cash flows using a 10 percent discount rate. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Present value $ ?

Reference no: EM132062034

Questions Cloud

Describe the research methodology matthew desmond : Describe the research methodology Matthew Desmond used for his book "Evicted."

How you can lead at the bedside : The purpose of this paper is for you to take a reflective look at your style: are you a leader at the bedside? what is your current style?

What is pearson cost of common equity : Pearson's CFO estimates that the company's WACC is 13.40%. What is Pearson's cost of common equity?

How can positive types of deviance foster social change : Even though the word "deviance" has negative implications, how can positive types of deviance foster social change?

Compute the dividends over the next five years : Compute the dividends over the next five years. Calculate the present value of these cash flows using a 10 percent discount rate.

Impact the use of contraceptives by americans : What are some of the factors (demographic and other) which seem to impact the use of contraceptives by Americans?

Discuss about the public health interventions : Community health centers were started to respond to the many health needs of some of the poorest and sickest communities in the nation.

Accounting for slow population growth : For much of human history, fertility rates were [low or high?] while mortality rates were [low or high?], accounting for slow population growth.

What is the new jim crow : What is the New Jim Crow? How does mass incarceration relates to social class and racial inequality?

User Account

All Pages