ECON 4400 Lecture Notes - Dividend Yield, Ratia, Volvo B4B Engine
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To find the net income, we need to find the eps. The stock quote tells us the p/e ratio for the stock is 10. 21. Since we know the stock price as well, we can use the p/e ratio to solve for eps as follows: P/e = 10. 21 = stock price / eps = $ / eps. We know that eps is just the total net income divided by the number of shares outstanding, so: Eps = ni / shares = . 299 = ni / 232,455. Ni = . 30(232,455) = ,646. 50: (lo1) we can use the two-stage dividend growth model for this problem, which is: P0 = [. 25(1. 28)/(. 13 . 28)][1 (1. 28/1. 13)8] + [(1. 28)/(1. 13)]8[. 25(1. 06)/(. 13 . 06)] P0 = . 55: (lo1) we can use the two-stage dividend growth model for this problem, which is: P0 = [d0(1 + g1)/(r g1)]{1 [(1 + g1)/(1 + r)]t}+ [(1 + g1)/(1 + r)]t[d0(1 + g2)/(r g2)] P0 = [. 74(1. 25)/(. 12 . 25)][1 (1. 25/1. 12)11] + [(1. 25)/(1. 12)]11[. 74(1. 06)/(. 12 . 06)]
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