Question 34 (2.5 points) In practice, a common way to value a share of stock...
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Question 34 (2.5 points) In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next 5 years or so, then find the "terminal" stock price using a benhmark PE ratio. Suppose a company just paid a dividend of $2. The dividends are expected to grow at 10 percent over the next 5 years. In 5 years, the estimated payout ratio (i.e., dividend/earnings) is 30% and the benchmark PE ratio is estimated to be 20 at that time. What is the target stock price in 5 years? $64.42 $97.94 $133.33 $214.74
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