LeBlanc Inc

question 50

Multiple Choice

LeBlanc Inc. currently has earnings of $10 per share, and investors expect that the earnings per share will grow by 3 percent per year. Furthermore, the mean PE ratio of all other firms in thesame industry as LeBlanc Inc. is 15. LeBlanc is expected to pay a dividend of $3 per share over the next four years, and an investor in LeBlanc requires a return of 12 percent. What is the forecasted stock price of LeBlanc in four years, using the adjusted dividend discount model?

• A) $150.00
• B) $163.91
• C) $45.00
• D) $168.83
• E) none of the above

---

Definitions:

Profit-Maximizing

A strategy or approach aimed at achieving the highest possible profit through adjustments in production or pricing.

Perfectly Competitive Industry

An industry in which all producers are price-takers.

Monopolist

A monopolist is a sole provider of a good or service in a market, facing no direct competition, which allows for control over prices.

Market Demand

The total quantity of a good or service that all consumers in a market are willing and able to purchase at a given price.