If a company has a current stock price of $45, an EPS of $3/share; EPS growth rate of 10% and the investors rate of return is 15%, calculate the cash cow price.

A) $18
B) $19
C) $20
D) $21
E) $22

Question

If a company has a current stock price of $45, an EPS of $3/share; EPS growth rate of 10% and the investors rate of return is 15%, calculate the cash cow price.A)  $18B)  $19C)  $20D)  $21E)  $22

jacqecy habbit · Accepted Answer

Final Answer : C, Explanation :  The cash cow price can be calculated using the formula: Cash Cow Price = EPS / Required Rate of Return. Here, EPS is $3 and the required rate of return is 15% or 0.15. Therefore, Cash Cow Price = $3 / 0.15 = $20.

If a company has a current stock price of $45, an EPS of $3/share; EPS growth rate of 10% and the investors rate of return is 15%, calculate the cash cow price.

A) $18
B) $19
C) $20
D) $21
E) $22

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