Firm recent earnings per share and dividend per share

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Reference no: EM131330121

Suppose that a firm's recent earnings per share and dividend per share are $2.50 and $1.50, respectively. Both are expected to grow at 9 percent. However, the firms current P/E ratio of 24 seems high for this growth rate. The P/E ratio is expected to fall to 20 within five years. Compute the dividends over the next five years.(Round final answer 3 decimal places.)

Compute the value of this stock in five years.

Calculate the price of this stock today, including all six cash flows.

Reference no: EM131330121

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