Dominik Corporation is a fast growing company. They were thefirst to the marketw

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Dominik Corporation is a fast growing company. They were thefirst to the marketwith state-of-the-art voice identification software. Earnings pershare for 2005were $2.08 and book value per share at the beginning of 2005 was$9.55. Dominikdoes not pay dividends nor is it expected to do so in theforeseeable future.Dominiks cost of equity is 12%. Analysts predict that earnings for2006 and2007 will be $3.22 and $3.90 respectively and that earnings willgrow at 19%per year for the following three years (2008-2010). The stock iscurrentlytrading at $35 per share and analysts have set a target price of$50 by the endof 2006. Assuming that the analysts earnings forecasts for the nextfive yearsare correct and assuming that after the end of the next five yearsthecompetition will have driven Dominiks abnormal returns down tozero what wouldyour target price be for the end of 2006? What will the price tobook value andprice-earnings ratios be at the end of 2006?

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