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The appropriate discount rate for bills bakery is 11

Bill's Bakery expects earnings per share of $2.56 next year. Current book value is $4.70per share. The appropriate discount rate for Bill's Bakery is 11 percent. Calculate the share price for Bill's Bakery if earnings grow at 3 percent forever.

P0= $4.70 + [$2.56-($4.70 x 0.11)]/ (.11-0.03) =$30.24

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Mathematics: The appropriate discount rate for bills bakery is 11

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