Price of a Share of​ Stock Assignment | Homework For You

You expect that Bean Enterprises will have earnings per share of​ $2 for the coming year. Bean plans to retain all of its earnings for the next three years. For the subsequent two​ years, the firm plans on retaining​ 50% of its earnings. It will then retain only​ 25% of its earnings from that point forward. Retained earnings will be invested in projects with an expected return of​ 20% per year. If​ Bean’s equity cost of capital is 14​%, then the price of a share of​ Bean’s stock is closest​ to:

A. $ 32.21 B. $ 20.13 C. $ 8.05 D. $ 12.08. Get Finance homework help today

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