You expect that Bean Enterprises will have earnings per share of $2 for the coming year.Bean plans to retain all of its earnings for the next three years.For the subsequent two years,the firm plans on retaining 50% of its earnings.It will then retain only 25% of its earnings from that point forward.Retained earnings will be invested in projects with an expected return of 20% per year.If Bean's equity cost of capital is 12%,then the price of a share of Bean's stock is closest to:

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C) 11ea7cce_3b9d_6768_928c_7bcd61122abb_TB1626_00 P₀ = 1.73/(1.12)⁴ + 1.90/1.12⁵ + (3.14/(.12 - .05))/1.12⁵ = 27.63 Each g is calculated as the 20% return on the projects × the retention ratio.

You Expect That Bean Enterprises Will Have Earnings Per Share