The following information has been collected regarding Big John C Most recent annual cash dividend per share $0.65 Dividend growth rate over the past five years 7% Most recent earnings per share $1.53 Average P/E ratio of similar firms 18 Required rate of return on equity capital 12%

The following information has been collected regarding Big John C Most recent annual cash dividend per share $0.65 Dividend growth rate over the past five years 7% Most recent earnings per share $1.53 Average P/E ratio of similar firms 18 Required rate of return on equity capital 12%

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 55E: Rebert Inc. showed the following balances for last year: Reberts net income for last year was...

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Question

10
The following information has been collected regarding Big John Company:
Most recent annual cash dividend per share
$0.65
Dividend growth rate over the past five years
7%
Most recent earnings per share
$1.53
Average P/E ratio of similar firms
18
Required rate of return on equity capital
12%
Estimate a price per share for Big John's stock using the constant dividend growth model.
$13.00
O $27.54
$5.42
$5.80
O s13.91
Submit Assessme

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