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What price would you recommend as the IPO price

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Reference no: EM132927741

Question - Konawalski's Kustom Erdapfel Chips, Inc., is the maker of gourmet German-style potato chips. The company began business three years ago in rural North Carolina and grew quickly as the product became known. Konawalski is now poised for national growth. Some analysts call the firm the next Krispy Kreme. The company pays a dividend of $0.25 per share. Earnings per share are currently $0.50, and analysts expect both earnings and dividends to grow at 17 percent per year for the next 5 years. The stock price is expected to increase in value by 60 percent over the next 3 years. If you believe that investors require a 17 percent rate of return on a stock of this risk, what price would you recommend as the IPO price for Konawalski?

Reference no: EM132927741

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