Financial analysts forecast L Brands (LB) growth for the future to be 11.2 percent. LB's most...

Financial analysts forecast L Brands (LB) growth for the future to be 11.2 percent. LB's most recent dividend was $1.10. What is the fair present value of L Brands’s stock if the required rate of return is 15.2 percent?

Expert Solution

Fair present value = D0(1 + g) / (r - g)

Fair present value = $1.10(1 + 0.112) / (0.152 - 0.112)

Fair present value = $30.58

jeff jeffy answered 2 years ago

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