Again assume the company undertakes the investment what


The Stambaugh Corporation currently has earnings per share of $8.25. The company has no growth and pays out all earnings as dividends. It has a new project which will require an investment of $1.60 per share in one year. The project is only a two-year project, and it will increase earnings in the two years following the investment by $2.10 and $2.45, respectively. Investors require a 12 percent return on Stambaugh stock. (a) What is the value per share of the company's stock assuming the firm does not undertake the investment opportunity? Price per share $ (b) If the company does undertake the investment, what is the value per share now? (Do not include the dollar sign ($). Price per share $ (c) Again, assume the company undertakes the investment. What will the price per share be four years from today? (Do not Price per share $

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Finance Basics: Again assume the company undertakes the investment what
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