Solved: Its earnings are expected to grow forever at a rate of 4, Cost Accounting

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Its earnings are expected to grow forever at a rate of 4

Laurel Enterprises expects earnings next year of $4 per share and has a 40% retention rate, which it plans to keep constant. Its equity cost of capital is 10%, which is also its expected return on new investment. Its earnings are expected to grow forever at a rate of 4% per year. If its next dividend is due in one year, what do you estimate the firm's current stock price to be?

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Cost Accounting: Its earnings are expected to grow forever at a rate of 4

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