Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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You expect that Bean Enterprises will have earnings per share of $2 for the coming year· Bean plans to retain all of its earnings for the next three years.  For the subsequent two years, the firm plans on retaining 50% of its earnings.  It will then retain only 25% of its earnings from that point forward.   Retained earnings will be invested in projects with an expected return of20% per year.  If Bean’s equity cost of capital is 12%, then the price of a share of Bean's stock is closest to:

 

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