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What is the anticipated share price at the beginning

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Question - Rick's Department Stores has had the following pattern of earnings per share over the last five years:

Year Earnings per share

20XU $5.00

20XV 5.30

20XW 5.62

20XX 5.96

20XY 6.32

The earnings per share have grown at a constant rate (on a rounded basis) and will continue to do so in the future. Dividends represent 40 percent of earnings.

Required -

a. Project earnings and dividends for the next year (20XZ).

b. If the required rate of return is 13 percent, what is the anticipated share price at the beginning of 20XZ?

Reference no: EM132573435

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