Packaging Corporation of America (PKG) ‒ That’s right. They make cardboard boxes and shipping containers. ‒ is currently selling for $181 per share. The dividends for the next three years are expected to be $5.00 for 2024, $5.60 for 2025, and $6.00 for 2026. The Value Line forecasts the price per share to be between $240 to $345 by the end of 2026. We will use $250. If we desire a rate of return of 10%, using the Discounted Cash Flow Model, what price would we value this stock? Would we consider PKG to be a potentially good investment?

Packaging Corporation of America (PKG) ‒ That’s right. They make cardboard boxes and shipping containers. ‒ is currently selling for $181 per share. The dividends for the next three years are expected to be $5.00 for 2024, $5.60 for 2025, and $6.00 for 2026. The Value Line forecasts the price per share to be between $240 to $345 by the end of 2026. We will use $250. If we desire a rate of return of 10%, using the Discounted Cash Flow Model, what price would we value this stock? Would we consider PKG to be a potentially good investment?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 22P

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