Firms recent earnings per share and dividend per share

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Reference no: EM131300287

Suppose that a firm’s recent earnings per share and dividend per share are $2.65 and $1.60, respectively. Both are expected to grow at 8 percent. However, the firm’s current P/E ratio of 17 seems high for this growth rate. The P/E ratio is expected to fall to 13 within five years. . Calculate the present value of these cash flows using a 10 percent discount rate. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Reference no: EM131300287

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