Suppose that a company has earnings per share of 3 and it, Ask an Expert

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Suppose that a company has earnings per share of $3 and it has 2 million shares outstanding. The company is going to undertake a project which will require investment of $1 million now, and another $1.1 million 1 year from today. The project will start to provide cash inflows from the end of year 2. The cash inflow will be $600,000 and will grow at a rate of 4% forever. The required rate of return is 10%. What is the share price of the stock today? (Hint: Use an NPVGO approach).

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92727104

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