Al's Infrared Sandwich Company had a book value of $18.00 at the beginning of the year, and the earnings per share for the past year was $7.41. Molly Miller, a research analyst at Miller, Moore & Associates, estimates that the book value and earnings per share will grow at 18.50 and 17.00 percent per year for the next four years, respectively. After four years, the growth rate is expected to be 6 percent. Molly believes the required return for the company is 10.60 percent. What is the value per share for Al's Infrared Sandwich Company? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Al's Infrared Sandwich Company had a
book value of $18.00 at the beginning
of the year, and the earnings per share
for the past year was $7.41. Molly Miller,
a research analyst at Miller, Moore &
Associates, estimates that the book
value and earnings per share will grow
at 18.50 and 17.00 percent per year for
the next four years, respectively. After
four years, the growth rate is expected
to be 6 percent. Molly believes the
required return for the company is
10.60 percent. What is the value per
share for Al's Infrared Sandwich
Company?
Note: Do not round intermediate
calculations. Round your answer to 2
decimal places.
Transcribed Image Text:Al's Infrared Sandwich Company had a book value of $18.00 at the beginning of the year, and the earnings per share for the past year was $7.41. Molly Miller, a research analyst at Miller, Moore & Associates, estimates that the book value and earnings per share will grow at 18.50 and 17.00 percent per year for the next four years, respectively. After four years, the growth rate is expected to be 6 percent. Molly believes the required return for the company is 10.60 percent. What is the value per share for Al's Infrared Sandwich Company? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
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