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# Haltom Enterprises has had the following pattern of earnings per share over the last five years: Year Earnings per Share 2000 .00 2001 .

1.  Haltom Enterprises has had the following pattern of earnings per share over the
last five years:
Year Earnings per Share
2000 . . . . . . . . . . . . . . \$3.00
2001 . . . . . . . . . . . . . . 3.18
2002 . . . . . . . . . . . . . . 3.37
2003 . . . . . . . . . . . . . . 3.57
2004 . . . . . . . . . . . . . . 3.78
The earnings per share have grown at a constant rate (on a rounded basis) and
will continue to do so in the future. Dividends represent 30 percent of earnings.
a. Project earnings and dividends for the next year (2005). Round all values in
this problem to two places to the right of the decimal point.
b. If the required rate of return (Ke) is 10 percent, what is the anticipated stock
price at the beginning of 2005?
2. If you owe \$40,000 payable at the end of seven years, what amount should your creditor accept in payment immediately if she could earn 12 percent on her money?

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