You Expect That Bean Enterprises Will Have Earnings Per Share

question 31

Multiple Choice

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 12%,then the price of a share of Bean's stock is closest to:

• A)$17.00.
• B)$10.75.
• C)$27.65.
• D)$43.50.

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Definitions:

Reinforcement

A stimulus or event that follows a behavior and increases the likelihood of that behavior occurring again in the future.

Punishment

A consequence imposed following undesirable behavior, intended to decrease the likelihood of that behavior recurring.

Stimuli

External or internal events that elicit a physiological or psychological response.

Superstitious Behaviors

Actions linked to beliefs in supernatural causality, where an individual believes that a particular behavior will influence outcomes, irrespective of any logical connection.