Suppose that a firmrsquos recent earnings per share and


Suppose that a firm’s recent earnings per share and dividend per share are $2.50 and $1.30, respectively. Both are expected to grow at 8 percent. However, the firm’s current P/E ratio of 22 seems high for this growth rate. The P/E ratio is expected to fall to 18 within five years. Compute the dividends over the next five years.

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Financial Management: Suppose that a firmrsquos recent earnings per share and
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