Question
In: Finance
Next year, BHH Co. is expected to pay a dividend of $2.77 per share from earnings...
Next year, BHH Co. is expected to pay a dividend of $2.77 per share from earnings of $4.82 per share. The equity cost of capital for BHH is 11.6%. What should BHH's forward P/E ratio be if its dividend growth rate is expected to be 3.5%
for the foreseeable future?
The forward P/E ratio is? (Round to two decimal places.)
Solutions
Expert Solution
Current share price = D1/(rs-g)
= 2.77 / (.116 - .035)
= 2.77 / .081
= $ 34.20 per share
Forward PE ratio = Current share price /estimated future earnings per share
= 34.20/ 4.82
= 7.10
jeff jeffy answered 7 months agoRelated Solutions
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