Question :
1). Sully Corp. presently has an EPS of $2.40, and the benchmark PE for the company is 23. Earnings are expected to grow at 5 percent per year.
a. What is your estimate of the present stock price?
Current stock price $
b. What is the target stock price in one year?
Target stock price $
c. Consider the company pays no dividends; evaluate the implied return on the company's stock over the next year?
Implied return of stock %
2.
2). Red, Inc., Yellow Corp., and Blue Company each may pay a dividend of $2.70 next year. The growth rate in dividends for all three companies is 5 %. The needed return for each company's stock is 8 percent, 11 %, and 14 %, correspondingly. Evaluate the stock price for each company?
Stock price
Red, Inc. $
Yellow Corp. $
Blue Company $