Problem:
Sully Corp. currently has an EPS of $3.10, and the benchmark PE for the company is 30. Earnings are expected to grow at 6 percent per year.
Required:
Question 1: What is your estimate of the current stock price?
Question 2: What is the target stock price in one year?
Question 3: Assuming the company pays no dividends, what is the implied return on the company's stock over the next year?
Note: Explain all calculation and formulas.