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FIN CH6 #5 The Stambaugh Corporation currently has earnings per share of $8. The company has no growth and pays out all earnings as dividends.
FIN CH6 #5The Stambaugh Corporation currently has earnings per share of $8.44. The company has no growth and pays out all earnings as dividends. It has a new project which will require an investment of $1.6 per share in one year. The project is only a two-year project, and it will increase earnings in the two years following the investment by $3.1 and $3.25, respectively. Investors require a 15 percent return on Stambaugh stockRequired:(a) What is the value per share of the company’s stock assuming the firm does not undertake the investment opportunity? (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16))Price per share $ _______(b) If the company does undertake the investment, what is the value per share now? (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16))Price per share $ ________(c) Again, assume the company undertakes the investment. What will the price per share be four years from today? (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16))Price per share $_______
FIN CH6 #5 The Stambaugh Corporation currently has earnings per share of $8.44. The company has no growth and pays out all earnings as dividends. It has a newproject which will require an...