What would the continuing value be

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The current year is 2019. Lewis Hamilton, an equity analyst for Barclays, produces the following earnings and dividend estimates for Mercedes Limited for years 2020-2022. The required rate of return is 12%. The firm has no debt.

               Actual                  Estimated

          2019    2020     2021     2022

EPS      6.00    7.00      4.00      6.00

DPS      4.00   4.00       4.00       4.00

Problem 1: Which of the following is the correct Normal Earnings in 2021?

Problem 2: Which of the following is the correct Cum-Dividend Earnings in 2021?

Problem 3: What is the Abnormal Earnings Growth for 2022?

Problem 4: If Abnormal Earnings are expected to grow at rate of 3% per year after 2022, what would the continuing value be in 2022?

Problem 5: What is the value per share in 2019?

Reference no: EM132930770

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