During the past 7 years, Burger Flippin' Corp.'s earnings have grown from $0.78 to $1.95 per...
During the past 7 years, Burger Flippin' Corp.'s earnings have grown from $0.78 to $1.95 per share. If the past growth rates are expected to continue into the future, what is the current value of Flippin's common stock to an investor who requires a 16% rate of return?
Homework Answers
.78/1.95 = .4 = PVIF i = 14%(growth rate)
Po = [$1.95(1.14)] / (.16 - .14)
Po = $2.223 / .02
Po = $111.15
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