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Surved Check my work mode: This shows what is correct or incorrect for the wo...

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Finance

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Surved Check my work mode: This shows what is correct or incorrect for the wo In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the "terminal" stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.34 The dividends are expected to grow at 19 percent over the next five years. The company has a payout ratio of 45 percent and a benchmark PE of 22 The required return is 13 percent a. What is the target stock price in five years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the stock price today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g. 32.16.) Answer is complete but not entirely correct. a. IS 155.76 Target price in five years Stock price today b. s 9493 X

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