Estimating the Implied End-of-Year Share Price Assume that a company’s beginning-of-period price is $14 per common...
Estimating the Implied End-of-Year Share Price
Assume that a company’s beginning-of-period price is $14 per common share, its dividends are $1 per share, and its expected cost of equity capital is 10%. What is the expected end-of-period price per common share?
Round answer to two decimal places.
$Answer
Homework Answers
(Ending price per share+Dividends-Beginnning price per share)/beginning price=cost of equity
=>(ending price+1-14)/14=10%
=>ending price=14.40
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