Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / PE and Terminal Stock Price In practice a common way to value a share of stock when a comp...

PE and Terminal Stock Price In practice a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so then find the terminal stock

PE and Terminal Stock Price. In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.15. The dividends are expected to grow at 10 percent over the next five years. The company has a payout ratio of 40 percent and a benchmark PE of 21. What is the target stock price in five years? What is the stock price today assuming a required return of 11 percent on this stock?

May 25 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions