What is the price of share of bean stock

Assignment Help Financial Management

Reference no: EM131991224

You expect that Bean Enterprises will have earnings per share of $2 for the coming year. Bean plans to retain all of its earnings for the next three years. For the subsequent two years, the firm plans on retaining 50% of its earnings. It will then retain only 25% of its earnings from that point forward. Retained earnings will be invested in projects with an expected return of 20% per year. If Bean's equity cost of capital is 10%, what is the price of a share of Bean's stock?

Hint: use g=ROE*retention ratio to calculate growth rate

Reference no: EM131991224

Questions Cloud

Discuss the railway labor act in detail : Using APA style format, write a paper of 4-5 pages describing the provisions of the following major labor laws as well as their impact on organizations.

What are the characteristics of financial markets : What are the characteristics of financial markets that support fair opportunities for all investors, private or institutional?

Determine the investment cash flow-operating cash flow : Determine the Investment cash flow, Operating cash flow, and Net cash flow based on the following assumptions.

Describe the types of investments : Determine and justify an asset allocation to these four classes in light of your stated portfolio objectives and policies. Describe the types of investments.

What is the price of share of bean stock : If Bean's equity cost of capital is 10%, what is the price of a share of Bean's stock?

How much will you have in retirement account : how much will you have in your retirement account 30 years from now?

Annual coupon payments and all selling at face value : Consider three bonds with 5.60% coupon rates, all making annual coupon payments and all selling at face value.

What is the present value of the business in year three : what is the present value of the business in year 3? This value is the "terminal value."

Analyze firm liquidity-rage-turnover and profitability : Analyze the firm's liquidity, leverage, turnover, and profitability using ratio analysis.

User Account

All Pages