CFA Practice Question

There are 191 practice questions for this study session.

CFA Practice Question

FasGrow is a no-growth firm and has two million shares outstanding. It is expected to earn a constant $20 million per year on its assets. If all earnings are paid out as dividends and the cost of capital is 10%, calculate the current price per share for the stock.
A. $200
B. $100
C. $150

User Contributed Comments 6

User Comment
robkaz dividend/share=20 million/2 million=$10/share P0=D1/COST OF CAPITAL P0=10/.1=$100
yesficom E/r=20/.1
E/r=200 Mill
Shelton P=D/K=($20m/2m)/10%=$100
fedor5 attentiveness....
aggabad Earnings per share/r=P
maria15 I got (A) at first. I forgot to calculate the 2M shares outstanding!
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