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Suppose That a Firm's Recent Earnings Per Share and Dividend

question 41

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Suppose that a firm's recent earnings per share and dividend per share are $2.50 and $1.00, respectively. Both are expected to grow at 5 percent. However, the firm's current P/E ratio of 23 seems high for this growth rate. The P/E ratio is expected to fall to 19 within five years. Compute a value for this stock. Assume a 10 percent required rate.


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Endocrinology

The branch of medicine that focuses on the structure, function, and disorders of the endocrine system, which produces hormones.

Gastroenterology

The branch of medicine focused on the digestive system and its disorders.

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A type of alternative medicine that emphasizes physical manipulation of the body's muscle tissue and bones.

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A medical doctor specializing in the diagnosis, treatment, and management of disorders and diseases related to the urinary system and male reproductive organs.

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