What should be the fair value of one share of stock today

Assignment Help Financial Management

Reference no: EM131953610

It is January 1st. XYZ Inc., which pays annual dividends, had EPS at the end of this past year of $4.20 (the dividend based on these earnings was just paid). You expect EPS to grow at 25% per year for the next 2 years, and then slow to a constant annual growth rate of 6%. If XYZ maintains a dividend payout ratio of 40% and has a cost of equity capital of 14% (EAR), what should be the fair value of one share of its stock today (assume a new buyer receives their first dividend in 1 year)?

Reference no: EM131953610

Questions Cloud

How much would it be willing to lend business owner : If the bank is charging customers 12% APR, how much would it be willing to lend the business owner?

What is the meaning of share value maximization : What is the meaning of share value maximization? If a firm attempts to maximize its fundamental stock price, is this good or bad for society? Explain.

Find the present value of all of the payments : This means you need to project each month's retirment withdrawl and use the NPV function to find the present value of all of the payments.

Propose two ways that a company can gain advantage : Propose two ways that a company can gain a competitive advantage over other companies when striving to recruit job applicants.

What should be the fair value of one share of stock today : what should be the fair value of one share of its stock today (assume a new buyer receives their first dividend in 1 year)?

Evaluate the major consequences of poor communication : Analyze the relationship between communication and resistance. Evaluate the major consequences of poor communication.

How the composers music reflects the culture and time period : Address how the composer's music reflects the culture and/or time period in which he or she lived. Be sure to include links to the videos in your response.

Statement writes the contents of counter : Assuming outFile is a file stream object and counter is a variable, which statement writes the contents of counter to the file associated with outFile?

What is peer learning : What is peer learning? Describe how peer learning could be used in classroom training and in computer or Internet-based training.

User Account

All Pages