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Ford Motors Corporation expects to have EPS this coming year of $3 per share. Ford...

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Accounting

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Ford Motors Corporation expects to have EPS this coming year of $3 per share. Ford Motors plans to retain 80% of its earnings for the next two years. For the subsequent three years, the firm will retain 40% of its earnings. It will then retain 20% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 15% per year. Any earnings that are not retained will be paid out as dividends. Assume Ford Motors's share count remains constant and all earnings growth comes from the investment of retained earnings. If Ford Motors's equity cost of capital is 13%, what price would you estimate for Ford Motors stock today

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