Bill’s Bakery expects earnings per share of $2.98 next year. Current book value is $4.9 per share. The appropriate discount rate for Bill’s Bakery is 11 percent. Calculate the share price for Bill’s Bakery if earnings grow at 3.8 percent forever. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the “$” sign in your response.)
Answer:
We have been provided with thre information that,
Bill’s Bakery expects earnings per share of $2.98 next year
Current book value is $4.9 per share.
The appropriate discount rate for Bill’s Bakery is 11 percent.
earnings grow at 3.8 percent forever
Calculation of the share price for Bill’s Bakery is as follow
