Njabini Chips Company., is the maker of gourmet German-style potato chips. The company began business three years ago in North Coast and grew quickly as the product became known. Njabini is now poised for national growth. Some analysts call the firm the next Kenchic . The company pays a dividend of Sh.1.00 per share. Earnings per share are currently Sh.5.00 and analysts expect both earnings and dividends to grow at 20 percent per year for the next 5 years. The stock price is expected to increase in value by 70 percent over the next 3 years. Required; If you believe that investors require a 20 percent rate of return on a stock of this risk, what price would you recommend as the IPO price for Njabini?

Njabini Chips Company., is the maker of gourmet German-style potato chips. The company began business three years ago in North Coast and grew quickly as the product became known. Njabini is now poised for national growth. Some analysts call the firm the next Kenchic . The company pays a dividend of Sh.1.00 per share. Earnings per share are currently Sh.5.00 and analysts expect both earnings and dividends to grow at 20 percent per year for the next 5 years. The stock price is expected to increase in value by 70 percent over the next 3 years. Required; If you believe that investors require a 20 percent rate of return on a stock of this risk, what price would you recommend as the IPO price for Njabini?

Name: Njabini Chips Company., is the maker of gourmet German-style potato ch
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Description: Njabini Chips Company., is the maker of gourmet German-style potato chips. Thecompany began business three years ago in North Coast and grew quickly as the productbecame known. Njabini is now poised for national growth. Some analysts call the firm th

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 29P

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