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Flora, Inc., reported an EPS of $5.0 this year (t0). Flora is expected to maintain a...

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Finance

Flora, Inc., reported an EPS of $5.0 this year (t0).Flora is expected to maintain a retained earnings ratio of 0.5 andROE of 0.18 for the next five years. After the fifth year, ROE isexpected to decrease to 0.08. Applying the cost of equity of 0.13and the multi-stage growth model, compute the intrinsic price ofFlora.

*Round your answer to TWO decimal places.

Answer & Explanation Solved by verified expert
4.2 Ratings (814 Votes)
EPS t0 50Expected Constant Retention ratio 050DPSt0 501retention ratio 501050 25Growth rate ROERetention    See Answer
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Flora, Inc., reported an EPS of $5.0 this year (t0).Flora is expected to maintain a retained earnings ratio of 0.5 andROE of 0.18 for the next five years. After the fifth year, ROE isexpected to decrease to 0.08. Applying the cost of equity of 0.13and the multi-stage growth model, compute the intrinsic price ofFlora.*Round your answer to TWO decimal places.

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