Question 29 B&L Industries is currently trading for $34.22 a share. Next year's dividend is expected to be $1.74 and grow at a sustainable growth rate of 3.0%. You have just heard that B&L plans to maintain its plowback ratio at 29.0% and its current earnings per share is $2.45 If you require 9.0% on an investment of similar risk, what is the stock's intrinsic value today and should you invest?

Question 29 B&L Industries is currently trading for $34.22 a share. Next year's dividend is expected to be $1.74 and grow at a sustainable growth rate of 3.0%. You have just heard that B&L plans to maintain its plowback ratio at 29.0% and its current earnings per share is $2.45 If you require 9.0% on an investment of similar risk, what is the stock's intrinsic value today and should you invest?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter8: Risk And Rates Of Return

Section: Chapter Questions

Problem 20PROB

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