It is january 1st xyz inc which pays annual dividends had, Ask an Expert

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It is January 1st. XYZ Inc., which pays annual dividends, had EPS at the end of this past year of $4.20 (the dividend based on these earnings was just paid). You expect EPS to grow at 25% per year for the next 2 years, and then slow to a constant annual growth rate of 6%. If XYZ maintains a dividend payout ratio of 40% and has a cost of equity capital of 14% (EAR), what should be the fair value of one share of its stock today (assume a new buyer receives their first dividend in 1 year)?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92791268

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