The EPS on a composite stock index this past year was $3.25. The earnings are expected to grow at a constant rate of 7 percent forever. The dividend payout ratio is expected to continue at its current rate of 35 percent, and the dividend yield is expected to be 4 percent. Calculate the intrinsic value of the index.

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The Answer of The EPS on a composite stock index this past year was $3.25. The earnings are expected to grow at a constant rate of 7 percent forever. The dividend payout ratio is expected to continue at its current rate of 35 percent, and the dividend yield is expected to be 4 percent. Calculate the intrinsic value of the index.

The EPS on a Composite Stock Index This Past Year