What is fair value for this stock today

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Reference no: EM132053169

1. A compay is expected to have earnings of $1.59 per share in one year, $1.84 per share in two years, and $2.25 per share in three years. The dividend payout ratio is also expected to remain at 30% over the next three years. The leading P/E ratio is expected to increase up to 20 in two years. If the required rate of return is 10%, what is a fair value for this stock today?

2. A company is expected to have earnings of $1.24 per share in one year, $1.71 per share in two years, $2.46 per share in three years, and $2.97 in four years. The dividend payout ratio is also expected to remain at 40% over the next four years. The lagging P/E ratio is expected to increase up to 25 in three years. If the required rate of return is 10%, what is a fair value for this stock today?

Reference no: EM132053169

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