Companys zs earnings and dividends per share are expected


Question: Company's Z's earnings and dividends per share are expected to grow indefinitely by 4% a year. Assume next year's dividend per share is $1 and next year's EPS is $1. The market capitalization rate is 14%. If Company Z were to distribute all of its earnings, it could maintain a level dividend stream of $1 a share. How much is the market actually paying per share for growth opportunities? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.)

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Finance Basics: Companys zs earnings and dividends per share are expected
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