You Expect That Bean Enterprises Will Have Earnings Per Share

question 17

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)$27.75
• D)$43.50

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Definitions:

Values

Numerical quantities, principles, or beliefs that are considered important or hold significance in a specific context, such as statistical data or personal ethics.

Mean Squares

A term used in ANOVA representing the average of squared deviations, critical for assessing variance within and between groups.

Null Hypothesis

The null hypothesis is a statement or assumption that there is no effect or no difference in a statistical hypothesis test, serving as the default position that the test seeks to challenge.

Population Means

The average of a set of values or measurements which belong to the entire population of a dataset.