You Expect That Bean Enterprises Will Have Earnings Per Share

question 26

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 Enterprises is closest to:

• A) $17.00
• B) $27.75
• C) $10.75
• D) $43.50

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Definitions:

Social Relationships

Connections between individuals in a society structured around mutual expectations, social norms, and personal bonds.

Emotion

A complex psychological state that involves a subjective experience, physiological response, and a behavioral or expressive response.

Dependent Personality Disorder

A mental health condition characterized by pervasive and excessive emotional dependence on others, leading to needy and clingy behavior.

Psychodynamic Explanations

A psychological theory that explains behavior in terms of internal mental processes, emotions, and unconscious motives.