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Laurel Enterprises expects earnings next year of $4.13 per share and has a 30% retention rate,
which it plans to keep constant. Its equity cost of capital is 11%, which is also its expected return
on new investment. Its earnings are expected to grow forever at a rate of 3.3% per year. If its next
dividend is due in one year, what do you estimate the firm's current stock price to be? The current
stock price will be $ (Round to the nearest cent.)

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Laurel Enterprises expects earnings next year of 413 per s.pdf

  • 1. Laurel Enterprises expects earnings next year of $4.13 per share and has a 30% retention rate, which it plans to keep constant. Its equity cost of capital is 11%, which is also its expected return on new investment. Its earnings are expected to grow forever at a rate of 3.3% per year. If its next dividend is due in one year, what do you estimate the firm's current stock price to be? The current stock price will be $ (Round to the nearest cent.)