Question
In: Finance
Kirk Co. is expected to have EPS of $4.75 next year and it normally pays out...
Kirk Co. is expected to have EPS of $4.75 next year and it normally
pays out all of the earnings as dividends. If Kirk Co. has an ROE
of 14% and required return of 14%, what should be its stock price?
Solutions
Expert Solution
Answer:
Calculation of the stock price:
Formula, we will be using to calculate stock price today:
Stock price = EPS in year 1 / Required rate of return
= $ 4.75 /14%
= $ 4.75 / 0.14
= $33.93
So, its stock price should be $33.93 (Answer)
jeff jeffy answered 3 years agoRelated Solutions
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