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What is the anticipated stock price

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Question - Justin Cement Company has had the following pattern of earnings per share over the last five years: Year. Earnings per Share

20X1. $8.00

20X2 8.48

20X3 8.99

20X4 9.53

20X5 10.10

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.

a. Project earnings and dividends for the next year (20X6).

b. If the required rate of return (Ke) is 13 percent, what is the anticipated stock price (P0) at the beginning of 20X6?

Reference no: EM132603975

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