## (Solution document) #13) Bill's Bakery expects earnings per share of \$2.56 next year. Current book value is \$4.70per share. The appropriate discount rate for Bill's...

#13) Bill's Bakery expects earnings per share of \$2.56 next year. Current book value is \$4.70per 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 percent forever.

P0= \$4.70 + [\$2.56-(\$4.70 x 0.11)]/ (.11-0.03) =\$30.24

When i calculate this above formula, I get \$84.29. How is the above calculated with steps to get \$30.24?

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This question was answered on: Dec 08, 2020

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