Pro Build Inc. has had a net income of $16 million in its most recent year. Net income is expected to grow by 3% per year. The firm always pays out 20% of net income as dividends and has 3 million shares of common stock outstanding. The required return is 14%. What is the value of the stock?
Pro Build Inc. has had a net income of $16 million in its most recent year. Net income is expected to grow by 3% per year. The firm always pays out 20% of net income as dividends and has 3 million shares of common stock outstanding. The required return is 14%. What is the value of the stock?
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 2P
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Pro Build Inc. has had a net income of $16 million in its most recent year. Net income is expected to grow by 3% per year.
The firm always pays out 20% of net income as dividends and has 3 million shares of common stock outstanding. The required return is 14%.
What is the value of the stock?
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